Ghani Chemical Industries Limited (PSX: GCIL) was incorporate in Pakistan as a private limited company in 2015 and was converted into a public limited company in 2017. The principal activity of the company is the manufacturing, trading & sale of medical and industrial gases and chemicals. Pattern of Shareholding As of June 30, 2025, GCIL has a total of 570.452 million shares outstanding which are held by 6721 shareholders. Associated companies have the majority stake of 61.338 percent in the company followed by individuals holding 33.78 percent shares. Joint stock companies account for 2.87 percent shares of GCIL while Directors, CEO, their spouse and minor children hold 1.85 percent shares. The remaining shares are held by other categories of shareholders. Historical Performance (2022-24) GCIL’s topline posted year-on-year growth over the period under consideration. Conversely, its bottomline posted a plunge in 2023. In 2022, GCIL’s gross margin registered a decline while its operating and net margins posted growth. This was followed by a decline in all the margins in 2023. In 2024, gross margin continued to fall while operating and net margins posted recovery. In 2025, all the margins attained their optimum level. The detailed performance review of the period under consideration is given below. In 2022, GCIL’s topline posted year-on-year growth of 9.804 percent to clock in at Rs.4214.09 million. Revenue proceeds from supplies and services, both posted year-on-year growth during the year. Revenue from supplies forms the major chunk of GCIL’s sales. Cost of sales mounted by 13 percent in 2022 mainly on account of fuel & power charges which are the only raw materials for the manufacturing of industrial and medical gases. This translated into 5.57 percent uptick in GCIL’s gross profit in 2022, however, its GP margin nosedived from 43.18 percent in 2021 to 41.51 percent in 2022. Distribution expense ticked up by 0.615 percent in 2022 due to transportation charges. Administrative expense surged by 28.67 percent in 2022 due to fee & subscription charges as well as adjustment arisen upon merger of GTECH. GTECH was merged into GCIL in w.e.f December 31, 2021; however, the court order for the same was received in October, 2022. Other expense mounted by 18.86 percent in 2022 on account of higher profit related provisioning booked during the year. Other income posted a staggering 417.536 percent in 2022 due to gain recorded on the disposal of operating fixed assets, credit balances written back, advance received against leasehold land as well as mark-up income received from bank accounts and advances to an associated company. GCIL posted 22.29 percent rise in its operating profit in 2022 with OP margin jumping up from 30.62 percent in 2021 to 34.1 percent in 2022. Finance cost ticked up by 10.26 percent in 2022 due to monetary tightening coupled with higher outstanding borrowings. Net profit strengthened by 25.94 percent in 2022 to clock in at Rs.870.449 million. This translated into EPS of Rs.2.05 in 2022 versus EPS of Rs.2.28 posted in 2021. The drop in EPS was due to an increase in the working capital of GCIL as the company increased its authorized capital during the year. NP margin improved from 18 percent in 2021 to 20.66 percent in 2022. In 2023, GCIL’s topline posted a paltry 2.8 percent year-on-year growth to clock in at Rs.4332.20 million. Due to slowdown of industrial activity on account of economic and political instability, the company produced 58.48 million cubic meters of gas, down 1.24 percent year-on-year. This resulted into capacity utilization of 64 percent in 2023 versus capacity utilization of 82 percent achieved in 2022. Cost of fuel and power wreaked havoc on the overall cost of sales which mounted by 16.54 percent in 2023. This squeezed the gross profit by 16.56 percent in 2023 with GP margin falling down to 33.70 percent. Lower sales volume resulted in 36.67 percent drop in distribution expense in 2023. Administrative expense also surged by 15 percent in 2023 due to higher payroll expense on account of inflationary pressure. Number of employees stood intact at 309 in both the years. Other expense dipped by 28.82 percent in 2023 predominantly due to lesser profit related provisioning booked during the year. Other income multiplied by 16 percent in 2023 due to massive return from bank deposits and advances to an associated company which was greatly offset by lower gain recorded on the sale of operating fixed assets. GCIL’s operating profit dipped by 9.1 percent in 2023 with OP margin dropping to 30.15 percent. Finance cost escalated by 63 percent in 2023 due to higher discount rate as well as increased borrowings to meet CAPEX requirement of the company. GCIL recorded 41.65 percent thinner bottomline to the tune of Rs.507.891 million in 2023. This translated into EPS of Rs.1.06 and NP margin of 11.72 percent. In 2023, the company increased its authorized capital from 550 million ordinary shares to 800 million ordinary shares and 50 million Class B shares. In 2024, GCIL’s topline expanded by 25.51 percent to clock in at Rs.5437.39 million. Industrial activity remained muted during the year. The company produced 55.470 million cubic meters of gas, down 5.15 percent year-on-year in 2024. This translated into capacity utilization of 61 percent in 2024. However, the company sold off the surplus finished goods inventory from the last year which resulted in increased sales volume. The company identified new avenues to improve its market penetration and volume during 2024. Cost of sales escalated by 33.16 percent in 2024 due to high electricity & gas prices. Gross profit, in absolute terms, enhanced by 10.46 percent in 2024, however, GP margin plunged to 29.66 percent. Distribution expense slid by 25.20 percent in 2024 due to lower transportation charges incurred during the year. This is because the company setup a new plant for the manufacturing of Oxygen and Nitrogen gases at Port Qasim to deliver the long-term agreement signed with Engro Polymer & Chemicals Limited. The setup of new production facility provided proximity to major customers, hence lower transportation cost. Administrative expense spiked by 12.27 percent in 2024 due to higher electricity & utility charges, vehicle running & maintenance charges as well as depreciation expense incurred during the year. GCIL expanded its workforce to 357 employees in 2024 to fulfill the rising demand. Other expense multiplied by 36 percent in 2024 due to higher profit related provisioning done during the year. Other expense was conveniently offset by 66.53 percent higher other income recognized during the year. This was mainly the result of compensation charges recovered from a customer due to short lifting of chemical supplies, return on advances to associated companies, gain on disposal of operating fixed assets and commission income earned due to services work at a hospital. GCIL recorded 28.16 percent improvement in its operating profit in 2024 with OP margin ticking up to 30.78 percent. Finance cost ticked up by 4 percent in 2024 due to increased borrowings and discount rate. Net profit improved by 54.72 percent in 2024 to clock in at Rs.785.807 million with EPS of Rs.1.58 and NP margin of 14.45 percent. In 2025, GCIL posted a staggering 36.75 percent year-on-year growth in its topline which clocked in at Rs.7435.42 million. This was largely driven by increasing demand of healthcare gases. The stronger net sales recorded by GCIL in 2025 was not only supported by local sales but also incorporated export sales. During the year, the company commenced operations of its 5th medical and industrial gases commercial project located at Hattar Special Economic Zone. This plant has a production capacity of 275 TPD. Due to high operational and cost efficiency of its newly commenced plant, GCIL’s gross profit grew by 111.60 percent in absolute terms. GP margin also attained its optimum level of 45.89 percent. Distribution expense mounted by 42 percent in 2025 because the company is transforming its distribution models to reduce turnaround times and increase service reliability. Sales promotion budget also increased during the year to attain greater market penetration. Administrative expense surged by 16.54 percent in 2025 due to fee & subscription charges as well depreciation expense. 118.45 percent spike in other expense in 2025 was the consequence of increased provisioning done for WWF, WPPF and ECL. Other income deteriorated by 28.81 percent in 2025 due to a considerable decline in profit on bank deposits. This was due to monetary easing as the company’s bank deposits considerably increased during the year. Operating profit grew by 84.71 percent in 2025 with OP margin climbing up to 41.58 percent. Finance cost escalated by 16.35 percent in 2025 due to increased external borrowings. GCIL recorded a phenomenal 156.58 percent growth in its bottomline which clocked in at Rs.2016.195 million in 2025. This translated into EPS of Rs.3.92 and NP margin of 27.12 percent in 2025. Recent Performance (1HFY26) During the first half of the ongoing fiscal year, GCIL recorded 5 percent uptick in its net sales which clocked in at Rs.3850.65 million due to higher sales volume. Due to operational efficiency, stability of Pak Rupee and a downtick in inflation, cost of sales plummeted by 17.16 percent in 1HFY26. This translated into 37.61 percent stronger gross profit in 1HFY26 with GP margin of 53.11 percent versus GP margin of 40.54 percent recorded in 1HFY25. Distribution expense escalated by a massive 327.51 percent in 1HFY26. This appears to be the result of continuous expansion and innovation of its distribution network and sales promotion strategies. Merchant market sales through national distributor network constitute second largest source of revenue for the company which includes small-scale industries, roadside clinics and hospitals especially in the remote areas. Administrative expense escalated by 25.58 percent in 1HFY26 likely due to increased payroll expense due to the expansion of the company’s operations across the country. Higher profit related provisioning appears to be the cause of 12.88 percent surge in other expense in 1HFY26. Conversely, other income deteriorated by 20.43 percent in 1HFY26 due to high-base effect as the company recovered compensation charges from a customer due to short lifting of chemical supplies in 1HFY25. Profit on bank deposits also dipped during 1HFY26. GCIL recorded 17.72 percent stronger operating profit in 1HFY26 with OP margin clocking in at 42.72 percent versus OP margin of 38.12 percent recorded in 1HFY25. Despite monetary easing, finance cost mounted by 26.76 percent in 1HFY26 due to increased external borrowings. The company posted net profit of Rs.1222.999 million in 1HFY26, up 73.45 percent year-on-year. This translated into EPS of Rs.2.14 in 1HFY26 versus EPS of Rs.1.41 recorded in 1HFY25. NP margin also improved from 19.23 percent in 1HFY25 to 31.76 percent in 1HFY26. Future Outlook With the improvement in macroeconomic fundamentals, GCIL is anticipating improved demand from the industrial sector. The company is also exploring new avenues of growth in both private and public sectors across the country to enhance its revenue. Moreover, as the petroleum exploration and production market is set is grow, the demand of nitrogen will eventually increase in order to comply with the stricter environmental regulations. The company has recently commissioned a 275TPD ASU plant in the KPK for the manufacturing liquid oxygen, nitrogen and argon to avoid the complexities associated with the transport of these gases. This coupled with import substitute Calcium carbide project being set up at Hattar, SEZ, KPK will provide the company with immense growth potential. Recently, the company has entered into a joint venture agreement with Mari Energies Limited to setup GHG Emission Mitigation Limited, a new project, to capture and process cold-vent/exhaust gases from Sachal Gas Processing Complex. It will produce 80,000 tons of LNG and 55,000 tons of industrial and food grade carbon dioxide and will significantly contribute to GCIL’s revenue and profitability in the future. GCIL has also joined hands with Precision UK, a UK based company, to market and install medical gas pipeline systems and equipments in the country. The company is also awaiting approval of the Explosives Department to setup 450 MT LPG Storage & Filling Plant at Phool Nagar, District Kasur. All these initiatives will significantly boost the company’s revenue and profitability besides diversifying its revenue streams. Moreover, the anticipated installation of 6-MW solar power project will also boost the company’s operational efficiency by keeping a check on its energy cost.