Interloop’s 1QFY25 EPS Falls 96% YoY

Staff Report:

Interloop Limited (ILP) has announced its 1QFY25 earnings, reporting an unconsolidated profit of Rs222 million, translating to an EPS of Rs0.16—down 96% YoY and 92% QoQ. These earnings came in sharply below market expectations, driven by shrinking gross margins and an unexpectedly high effective tax rate.

Gross margins dropped to 19% in 1QFY25 compared to 22% in 4QFY24 and 33% in 1QFY24, mainly due to the initial operational stages of its apparel plant, rising wages in Punjab, and increased hiring to support expansions, particularly in denim. With salaries and wages making up 21% of ILP’s cost of sales, the recent 16% minimum wage hike in Punjab compounded the cost pressures, further squeezing margins.Azfar Ahsan Meets Saudi Investment Minister to Foster B2B Investments

The effective tax rate skyrocketed to 74% in 1QFY25, a sharp contrast to the 8% rate seen in the same quarter last year. Meanwhile, net sales rose 8% YoY to Rs42 billion, though they fell 4% QoQ, disappointing expectations.

Despite expansion plans driving up administrative and distribution costs, other income grew by 112% YoY and 31% QoQ to Rs277 million. However, this was offset by a 29% YoY rise in finance costs, further contributing to the dismal bottom line.

The steep decline in earnings signals that ILP’s ongoing expansion projects and rising operational costs are weighing heavily on profitability, and without clear improvements in margin control or tax efficiency, the outlook remains challenging.