Textile: Rate Cut Ushers Tailwinds for Textile Sector – EPS Gains on the Horizon - By HMFS Research

<p></p><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">The recent 100bps policy rate cut by the State Bank of Pakistan on 5th May 2025, bringing the benchmark rate down to 11%, is poised to provide a meaningful boost to the profitability of textile companies under our coverage. Given the sector&rsquo;s reliance on debt to finance working capital, capital expenditures, and modernization initiatives, the reduced cost of borrowing is expected to translate into improved earnings across the board.</span></li></ul><ul><li><span style="font-family:Arial, Helvetica, sans-serif;font-size:medium;">Textile companies typically operate with high working capital requirements, often funded through short-term borrowing. This dependency on credit has rendered them vulnerable to the high-interest rate environment of rec...