Sitara Chemical Industries Limited has reported an encouraging increase in revenue for the first quarter of the financial year 2026-27, although higher financing and depreciation expenses affected its overall profitability. According to the company’s latest financial results for the quarter ended September 30, 2026, net sales increased by nearly 12% compared with the corresponding period of the previous financial year.
The company recorded net sales of Rs8.87 billion during the quarter, compared with Rs7.92 billion in the same period last year. This represents an increase of approximately 11.98%, reflecting growth in its business operations.
Gross profit also improved, reaching Rs1.48 billion against Rs1.38 billion in the corresponding quarter of the previous year, showing an increase of approximately 7.68%. However, the gross profit margin declined from 17.41% to 16.74%, mainly due to additional depreciation expenses following the capitalization of the company’s newly completed 50 MW coal-fired power plant.
Despite the improvement in sales and gross profit, the company’s bottom-line performance remained under pressure. Sitara Chemical reported a profit after tax of Rs199.32 million for the quarter, compared with Rs349.04 million in the same period last year. Consequently, earnings per share (EPS) declined to Rs9.30 from Rs16.29.
One of the major factors affecting profitability was the substantial increase in finance costs. Finance costs rose to Rs617.80 million from Rs348.68 million in the corresponding quarter of the previous year. The increase was mainly attributed to borrowing costs associated with the newly commissioned coal-fired power plant, which had previously been capitalized during the construction period. Higher borrowing rates during the quarter also contributed to the increase.
Chemical and Textile Segments Performance
Sitara Chemical operates through two major business divisions: Chemical and Textile.
The Chemical Division generated revenue of approximately Rs7.75 billion during the first quarter, compared with Rs6.81 billion in the corresponding period last year. Its segment profit stood at Rs292.34 million.
Meanwhile, the Textile Division generated revenue of approximately Rs1.11 billion, slightly higher than Rs1.11 billion recorded in the same quarter last year. The segment reported a profit of Rs49.19 million, compared with Rs50.76 million previously.
The company’s textile operations maintained relatively stable performance, supported by improved selling prices of yarn and fabric compared with the previous financial year.
Financial Position and Cash Flow
The company’s total assets stood at Rs50.44 billion as of September 30, 2026, compared with Rs51.19 billion at June 30, 2026. Total equity increased to Rs20.65 billion from Rs20.45 billion at the end of the previous financial year.
Sitara Chemical also reported positive operating cash flow of Rs388.93 million during the quarter, compared with a cash outflow of Rs424.27 million in the corresponding period last year. Cash and bank balances increased to Rs515.76 million from Rs221.75 million at June 30, 2026.
Management’s Outlook
Looking ahead, the company highlighted that geopolitical tensions involving the United States and Iran, broader instability in the Middle East, and regional tensions involving Saudi Arabia and the Houthis could create challenges for global energy prices, freight expenses and supply chains.
Management stated that the company would continue focusing on prudent procurement, cost optimization, operational efficiency and financial discipline to manage potential risks and support sustainable business growth.
Shariah Compliance Status
The company’s Shariah Compliance Review Report, issued by Alhamd Shariah Advisory Services (Private) Limited for the period ended September 30, 2026, concluded that Sitara Chemical’s business affairs, transactions and procedures were conducted in accordance with Shariah principles. The report also confirmed that Shariah non-compliant income earned during the period had been purified.
Conclusion
Sitara Chemical Industries delivered solid revenue growth during the first quarter of FY2026-27, supported by its chemical operations and stable textile segment performance. However, higher depreciation and financing expenses following the commissioning of its 50 MW coal-fired power plant significantly affected net profitability.
The company’s ability to manage borrowing costs, improve operating margins and maintain revenue growth will remain important factors in determining its financial performance in the coming quarters.
