Pak Elektron Expects Power Segment Boost in 2H2025

PAEL eyes $50m US exports, meter business expansion, and stronger margins as growth accelerates.

Pak Elektron Limited (PAEL) is banking on surging exports and rising demand in its power segment to drive growth in the second half of 2025, with management highlighting strong order flows, market share gains, and higher margins. The company reported that it has already supplied $16 million worth of orders to the United States this year and is targeting completion of a $44 million export book by December.Pakistan’s IT Exports Surge by 39% in January 2024

In a meeting with analysts on September 15, Chief Financial Officer Manzar Hasan and GM Finance Nadeem Asghar said the company’s entry into the US transformer market has opened significant opportunities, including orders from global players such as Tesla. PAEL has shipped about 20–25 percent of its US export order book in the first half of the year and expects to fulfill the remaining by year-end. Management said the company is also pursuing US certification to expand sales to government entities, which would further accelerate growth.

Despite a 19 percent tariff on Pakistani goods in the US market, PAEL executives stressed that customers are absorbing the cost, given Pakistan’s competitive edge over major exporters such as China, India, and South Korea. The company benefits from shorter delivery times—about nine months compared to two years for US manufacturers—providing an advantage in securing orders. Countries such as the UAE and Turkey face lower tariffs but are not significant transformer exporters.

PAEL’s domestic business is also positioned for expansion, particularly in energy meters. The company expects meter sales to double or triple next year, rising from Rs4.5 billion to around Rs9 billion, as state-owned distribution companies are mandated to replace single-phase meters with two-phase and three-phase automated metering (AMR) systems. PAEL holds about 20 percent of this market, competing with around eight players, with management citing decent margins in the segment.

The appliance business remains a steady contributor. PAEL’s distribution agreement with Electrolux generated Rs2 billion in sales this year, while its Panasonic sales totaled Rs1.5 billion. Management noted that premium brands take time to penetrate the Pakistani consumer market, but assembly of Electrolux products in its own facilities allows the company to leverage the brand’s global reputation.

Overall sales growth for 2025 is expected to exceed 30 percent, though volumes will still remain about 25 percent below the peak achieved in 2021. In the second quarter, gross margins improved to 27.7 percent from 26 percent in the first quarter, driven by higher volumes. Out of 2,600 appliance dealers across Pakistan, PAEL works with more than 1,500, underscoring its extensive retail presence.

The domestic appliance market is valued at Rs328.6 billion ($1.2 billion), where PAEL commands a 19 percent share in refrigerators, 9 percent in air conditioners, 4 percent in washing machines, and 25 percent in water dispensers. Its dominance is more pronounced in the power segment, where it controls 90 percent of the Rs16 billion power transformer market, 17 percent of the Rs41 billion distribution transformer market, 25 percent of the Rs17 billion switchgear segment, and 18 percent of the Rs20 billion energy meter market.

Analysts maintain a buy stance on PAEL stock, citing attractive valuations. The company is currently trading at 10 times estimated 2025 earnings and 8.5 times forecast 2026 earnings, reflecting strong upside potential as power exports and metering demand accelerate.

The company’s growth trajectory highlights the dual role of exports and domestic power infrastructure in underpinning earnings. With global recognition through Tesla orders, expansion into the US government market pending certification, and large-scale replacement of energy meters at home, PAEL is positioned to strengthen its role as a key player in Pakistan’s industrial and household appliance landscape. Read More Stories on NewzToday