29 April 2024

Pakistan Textile Sector

KSE100 Index: Closing 72,742.74 ↑ (771.34)

ILP: 3QFY24 result preview

▪ Interloop Limited (ILP) is expected to announce its 3FY24 results on 30-Apr-24. We expect the company to post net earnings
of Rs0.93/share for the period compared to Rs6.84/share in 3QFY23.
▪ We highlight, absence of windfall exchange gain on receivables is expected to result in YoY decline in ILP’s earnings this
quarter. We expect ILP to report exchange loss of ~Rs500mn during 3QFY24 compared to exchange gain of Rs5.4bn in
3QFY23. Recall, PKR/US$ witnessed 25% QoQ depreciation during 3QFY24 compared to 1% QoQ appreciation recorded
during the current quarter. Excluding the impact of this, we expect 35% YoY jump in revenues.
▪ Keeping our long-term growth view intact for ILP, we believe that the near-term earnings pressure could present an attractive
entry opportunity for investors. Trading at 5x FY25E EPS and PEG of 0.3x, we reiterate our Buy call for ILP. For details,
please refer to our detailed report, released earlier this month. The stock offers 34% upside to our TP of Rs100.

3QFY24 EPS to decline due to absence of Exchange gains

Interloop Limited (ILP) board is scheduled to meet on 30-April, 2024 to discuss Shagufta Irshad
company’s 3QFY24 results. We expect the company to post EPS of Rs0.93 in [email protected]
3QFY24 compared to Rs6.84 reported in 3QFY23. A YoY decline in earnings +9221 111-574-111 Ext: 3103
mainly reflects absence of windfall exchange gain this year (3QFY23 Exchange
gain net of tax: Rs3.80/sh) compared to expected net exchange loss of Rs0.34/sh
due to QoQ appreciation of PKR/US$. Excluding the impact of exchange gain Bloomberg Code: ILP PA
(loss), we expect ILP to report revenue growth of 35% however, we are still looking Target Price: Rs100.00
at a 58% YoY decline in EPS due to decline in margins and increase in non- Market Price: Rs74.75
concessionary bank borrowings. Hosiery segment will remain the top-contributor to Market Cap: Rs105bn, US$377mn
revenues, contributing ~80% to the company’s top-line. 1-yr ADTO: 0.7mn shares, Rs39mn, US$0.1mn
1-yr High / Low: Rs75.25 / 32.59
Margins to remain weak this quarter
We expect ILP gross margins to decline by 100bps to 27% QoQ due to multiple Price performance relative to KSE100
reasons including 1) decline in overall export prices, 2) PKR/U$ QoQ appreciation,
3) gradual commissioning of the new apparels and its related expenses along with ILP KSE-100
250%
full-quarter of plant depreciation and financials charges (compared to 2Ms in the
previous quarter), and lastly, 4) increase in fuel costs. 200%

ILP- Key Stats from Earnings preview 150%

(Rs mn) 3QFY24E 3QFY23 YoYΔ 2QFY24 QoQΔ 9MFY24E 9MFY23 YoYΔ 100%
Net Sales 34,327 31,206 10% 35,316 -3% 108,143 84,128 29%
50%
Jul-23
Jan-23

Jan-24
Sep-23

Nov-23
Mar-23

Mar-24
May-23

Gross Profit 9,269 15,363 -40% 10,711 -13% 33,554 30,722 9%

PAT 1,308 9,583 -86% 2,984 -56% 10,334 14,169 -27%
EPS (Rs) 0.93 6.84 -86% 2.13 -56% 7.37 10.11 -27%
Source: Bloomberg, PSX, JS Research
EPS–Exchg gain 1.27 3.04 -58% 2.62 (0.52) 8.05 4.32 86%
Source: Company announcements, JS Research

Long term growth outlook remains intact; Reiterate Buy

We reiterate our Buy rating for ILP with a TP of Rs100. Our long-term earnings
growth outlook for the company is intact -led by 1) expected recovery in export

Research Entity Notification Number: REP-084 JS Research is available on Bloomberg, Thomson Reuters, CapitalIQ and www.jsgcl.com
www.jamapunji.pk Please refer to the important disclosures and disclaimer on the last page
ILP: 3QFY24 result preview
29 April 2024

volumes and prices, 2) PKR/US$ depreciation to normalize at 5% pa, 3) increase ILP - Financial Snapshot
revenue contribution and margins from full-fledge commissioning of the new FY23A FY24E FY25F
apparels pant and 4) reduced dependence on external financing and expected Net Sales (Rs mn) 119,200 147,048 169,928
decline in interest rates. YoY growth 31% 23% 16%
Gross Profit (%) 36% 32% 31%
For a detailed analysis of Interloop Limited, please refer to our detailed report on
GP Exl Exchg
Interloop Limited released earlier this month. 31% 31% 30%
gain
PAT (Rs mn) 20,172 14,642 20,293
EPS (Rs) 14.39 10.45 14.48
EPS Exl. Exchg
8.45 9.30 13.04
gain (Rs)
DPS (Rs) 5.00 4.00 5.00
P/E (x) 5.20 7.17 5.17
D/Y (%) 7% 5% 7%
Company Accounts, JS Research

2
ILP: 3QFY24 result preview
29 April 2024

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Company may not achieve its target price for various reasons including company specific risks, competition risks, sector related risks, change in laws, rules
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