Supernet Limited (PSX: GEMSPNL) was incorporated in Pakistan in 1995. The company is a wholly owned subsidiary of Telecard Limited and is engaged in providing satellite and microwave communication services. Pattern of Shareholding As of June 30, 2025, GEMSPNL has a total of 123.444 million shares outstanding which are held by 129 shareholders. Associates have the majority stake of 81.18 percent in the company followed by joint stock companies holding 9.16 percent shares. Individuals account for 9 percent shares of GEMSPNL. The remaining ownership is distributed among other categories of shareholders. Historical Performance (2022-2025) Except for a year-on-year drop in 2025, GEMSPNL’s topline followed an upward trajectory over the period under consideration. Its bottonline which dwindled until 2023 registered phenomenal growth in the subsequent years. The company’s gross margin stayed afloat in 2022 while its operating and net margins shrank. In 2023, gross margin posted an uptick while operating and net margins continued to drop. In 2024, gross margin drastically fell while operating and net margins improved. All the margins recorded staggering growth in 2025. The detailed performance review of the period under consideration is given below. In 2022, GEMSPNL’s topline grew by 14.92 percent to clock in at Rs.2837.028 million. All the three revenue sources – data networking, sale of equipment and licenses and revenue from turnkey project – posted growth during the year. While the company focused on high margin projects, however, high electricity charges didn’t allow the GP margin to attain any significant growth in 2022 which was recorded at 10.16 percent versus GP margin of 10.11 percent posted in the previous year. In absolute terms, gross profit strengthened by 26.64 percent in 2022. Administrative expense surged by 15.54 percent in 2022 on the back of higher payroll expense and rent & utility charges incurred during the year. GEMSPNL grew its workforce from 390 employees in 2021 to 396 employees in 2022. Distribution expense ticked up by 6.38 percent in 2022 due to higher salaries of sales force as well as increased sales promotion and travelling charges incurred during the year. The company recorded exchange loss of Rs.90.504 million in 2022 versus exchange gain of Rs.46.896 million recorded in 2021. Other income also deteriorated by 40.48 percent in 2022 due to lesser reversal recorded on provisioning done against staff incentives and thinner scrap sales. All these factors translated into 6.38 percent deterioration in operating profit in 2022 with OP margin clocking in at 10.90 percent versus OP margin of 13.38 percent recorded in the previous year. Finance cost ticked up by 4.05 percent in 2022 due to monetary tightening. Lesser outstanding debt, stronger cash position and increased liquidity culminated into gearing ratio of 0.59 percent in 2022 versus gearing ratio of 12.21 percent recorded in 2021. Net profit tumbled by 7.20 percent to clock in at Rs.188.097 million in 2022 with EPS of Rs.1.52 versus EPS of Rs.2.03 recorded in 2021. NP margin also slumped from 8.21 percent in 2021 to 6.63 percent in 2022. In 2023, GEMSPNL recorded 20.83 percent stronger topline to the tune of Rs.3427.923 million. Except fro revenue from turnkey projects, the other two sources of revenue performed quite well in 2023. The massive shift towards digitalization, E-commerce and connectivity across economic sectors proved to be an ultimate opportunity for the company to spread its wings. Higher connectivity margins also proved to be a blessing for the company; however, it was offset by elevated electricity charges and resulted in only 1 percent growth in gross profit in 2023. GP margin clocked in at 10.88 percent in 2023. Administrative expense escalated by 29.33 percent in 2023 due to higher payroll expense, rent & utility charges as well as allowance booked for ECL. The company streamlined its workforce to 364 employees in 2023. Marketing expense surged by 21.79 percent in 2023 due to higher salaries of sales force, advertising and travelling expense incurred during the year. Deteriorating value of local currency resulted in exchange loss of Rs.112.144 million in 2023, up 23.91 percent year-on-year. Other income continued to slid to the tune of 46.70 percent in 2023 due to no scrap sales and no reversal of staff provision recorded during the year. Operating profit slipped by 45.71 percent in 2023 with OP margin nose-diving to 4.90 percent. Finance cost mounted by 31.74 percent in 2023 due to higher discount rate. While outstanding debt shrank during the year, thinner cash position resulted in gearing ratio of 7.38 percent in 2023. Net profit dwindled by 73 percent to clock in at Rs.50.803 million in 2023. This translated into EPS of Rs.0.410 and NP margin of 1.48 percent in 2023. GEMSPNL posted an exceptional year-on-year growth of 114.98 percent in its topline 2024 which clocked in at Rs.7369.375 million in 2024. Sale of equipment and license performed staggeringly during the year and grabbed the greatest share of sales mix in 2024. Revenue from data networking services had the lion’s share in GEMSPNL’s sales mix until 2023. Revenue from turnkey projects continued to decline in 2024. Pak Rupee depreciation and higher energy cost didn’t allow the company to attain stronger gross margin despite the company’s focus on high yielding projects. In absolute terms, gross profit improved by 26.62 percent in 2024, however, GP margin descended to its lowest level of 5.60 percent. Administrative expense posted 10.77 percent spike in 2024 due to higher payroll expense, rent & utility expense and allowance for ECL. The company continued to rationalize its workforce which stood at 314 employees in 2024. Greater salaries of sales force and higher advertisement expense continued to be the driver of higher distribution expense in 2024. Exchange loss dipped by 64.95 percent to clock in at Rs.39.302 million in 2024. Thinner income from term deposits resulted in 64.76 percent lower other income in 2024. GEMSPNL recorded 137.68 percent stronger operating profit in 2024 with OP margin ticking up to 5.41 percent. Finance cost hiked by 31.31 percent in 2024 due to monetary tightening an higher outstanding borrowings. Gearing ratio was recorded at 6.43 percent in 2024. GEMSPNL posted net profit of Rs.155.872 million in 2024, up 206.82 percent year-on-year. This resulted in EPS of Rs.1.26 and NP margin of 2.12 percent in 2024. In contrast with the previous years, GEMSPNL posted 3 percent downtick in its topline in 2025 which clocked in at Rs.7149.227 million. While sale of equipment and licenses still had the major share in the company’s sales mix, it massively fell in 2025. Conversely, revenue from data networking and turnkey projects registered growth during the year. Although the company assumed lesser projects during the year, it focused on cost optimization and gaining long-term recurring projects particularly in Banking, Oil & Gas, Defense, mobile network operations and other leading segments. This approach enabled GEMSPNL to post the optimum GP margin of 18 percent in 2025. In absolute terms, gross profit improved by 20.33 percent in 2025. Unlike previous two years where the company was downsizing, 2025 was marked by workforce expansion which led to 397 employees at the year-end. This pushed up the payroll expense which alongside higher ECL drove up administrative expense by 28.45 percent in 2025. Inflationary pressure pushed up marketing expense by 12.87 percent in 2025. GEMSPNL recorded exchange gain of Rs.22.969 million in 2025. Thinner income from bank deposits continued to take its toll on other income which contracted by 31.91 percent in 2025. Operating profit picked up by 33.32 percent in 2025 with OP margin climbing up to 7.44 percent. Finance cost shriveled by 23.93 percent in 2025 due to the onset of monetary easing. Gearing ratio also dipped to 2.41 percent in 2025. GEMSPL’s net profit enlarged by 48.47 percent to clock in at Rs.231.419 million in 2025. EPS was recorded at Rs.1.87 while NP margin clocked in at 3.24 percent. Recent Performance (1QFY26) During the first quarter of the ongoing fiscal year, GEMSPNL recorded 14 percent year-on-year dip in its topline which clocked in at Rs.1238.957 million. This was on the back of decline in revenue from turnkey projects and sale of equipment & licenses. While revenue from data networking posted decent growth during the quarter, it couldn’t beat the downward push exerted by the other two revenue sources. This appears to be the result of the company’s strategy of assuming long-run and high margin projects instead of one-off projects that provide transient benefit to the topline at the expense of low margins. Gross profit dipped by 6.21 percent in 1QFY26, however, GP margin improved from 9.17 percent in 1QFY25 to 9.44 percent in 1QFY26. The company kept a check on its administrative expense which posted 11.49 percent decline in 1QFY26. Conversely, focus on building lasting relationships with customers drove up marketing expense by 11.42 percent during the period under review. Exchange loss clocked in at Rs.5.91 million in 1QFY26, up 588 percent year-on-year. Other income grew by 15.11 percent during 1QFY26, however, couldn’t offset the exchange loss. GEMSPNL’s operating profit weakened by 12.59 percent in 1QFY26 with OP margin clocking in at 8.79 percent versus OP margin of 8.64 percent registered in 1QFY25. Finance cost dropped by 32.65 percent in 1QFY26 due to monetary easing and lesser outstanding liabilities. GEMSPNL registered net profit of Rs.49.488 million in 1QFY26, down 41.81 percent year-on-year. This translated into EPS of Rs.0.40 in 1QFY26 versus EPS of Rs.0.69 posted in 1QFY25. NP margin also deteriorated from 5.90 percent in 1QFY25 to 4 percent in 1QFY26. Future Outlook The company is actively expanding its footprint in the cyber security and IT infrastructure segments with the focus on long-term recurring projects. This will ensure a stable revenue stream for the company. The company has also enhanced its E-solutions portfolio over the period with the focus on both local and international clientele. During 1QFY26, the company rebranded itself as Supernet Global in order to expand in high-growth international digital markets such as the Middle East, Africa and Central Asia. In this regard, its UAE based subsidiary, Phoenix Global FZE will serve as the company’s first regional hub. The company is also progressing towards its merger with Supernet Technologies Limited (STL), the holding company, listed on the main board of the PSX. The merger will shift GEMSPNL from the gem board to the main board of the PSX which will enhance its visibility and create long-term value for the shareholders.