Top 5 Devaluation-Exempt Companies on the PSX

Introduction

The Pakistani economy continues to grapple with persistent currency adjustments and a domestic purchasing power crisis, leaving investors searching for ways to preserve real returns. On the Pakistan Stock Exchange, one of the most effective wealth preservation strategies is identifying businesses that are structurally insulated from, or even benefit from, rupee depreciation. These companies fall broadly into two categories. The first group consists of export oriented enterprises that earn the bulk of their revenue in hard currencies such as the US Dollar, Euro, or British Pound, while keeping a large share of their cost base denominated in rupees. The second group consists of domestic commodity producers whose output prices are formally pegged to international US Dollar benchmarks under regulatory frameworks, meaning that even though transactions occur locally in rupees, the underlying value automatically rises whenever the currency weakens. This report profiles five companies that fit this devaluation resistant framework, examining their latest quarterly performance, corporate strategy, and the structural mechanisms that shield their earnings from domestic macroeconomic shocks.

5. Interloop Limited (ILP)

Interloop Limited is a vertically integrated textile giant and a global leader in hosiery manufacturing, operating a state of the art footprint across six countries. It is one of Pakistan’s largest export oriented enterprises and serves as a direct supplier to global brands including Nike, Adidas, Puma, FILA, and H&M. With more than 90% of revenues denominated in foreign currencies, the company’s earnings are exceptionally well hedged against rupee depreciation and largely insulated from the domestic purchasing power crisis.

The company is transitioning into a full family clothing partner for major global brands, and this shift is driving volume recovery across its core divisions. In the apparel segment, Interloop has resolved earlier teething issues related to workforce recruitment and training at its new plant, which reached approximately 50% capacity utilization in fiscal year 2026 and generated more than USD 100 million in annual revenue. The unit is expected to achieve gross level break even in fiscal year 2027, having already posted positive EBITDA margins in recent quarters, and it currently supplies a comprehensive apparel range to Adidas. The denim segment, with annual capacity exceeding 12 million pieces, operated at a 68% utilization rate during 2026, and capacity is planned to expand to 18 million pieces in fiscal year 2027 in response to rising demand for high value fashion products. In hosiery, a 25% capacity expansion following the full operationalization of Plant 6 has allowed the company to internalize orders that were previously outsourced, improving margin capture and operational control.

Geographic diversification remains central to Interloop‘s strategy. The company plans a USD 35 million investment in Egypt, expected to be commissioned in the first quarter of calendar year 2027, alongside a 64% stake acquisition in US based Top Circle Hosiery Mills and the European premium Bonnie Doon brand, both of which extend direct access to high value retail markets.

Margins have progressed steadily through fiscal year 2026 on the back of higher capacity utilization and an improved product mix.

Forward looking estimates point to a significant earnings turnaround as newly commissioned plants scale toward optimal utilization.

The policy backdrop for late 2026 and 2027 is broadly favourable. The removal of the 1% advance tax on exports, offset by a modest rise in the turnover tax to 1.25%, reduces the direct tax burden by 0.75% and eases reliance on costly working capital financing. A proposed two percentage point cut in the super tax for large corporates is expected to add a direct 3.5% to bottom line earnings, while exporters continue to benefit from concessional export refinancing rates of 4.5% and uninterrupted power allocations that sustain cost competitiveness. On the input side, domestic cotton arrivals remained flat at 5.43 million bales by late December, an estimated 30% shortfall against government targets, prompting the industry to import roughly 4 million bales of raw cotton at an estimated cost of USD 1.16 billion. Vertically integrated operators such as Interloop, with global sourcing networks spanning multiple countries, are well positioned to navigate this shortfall without operational disruption.

4. Mari Energies Limited (MARI)

Mari Energies Limited, formerly Mari Petroleum Company Limited, is one of Pakistan’s leading upstream energy players and functions as a strategic system balancer within the national gas network, ensuring stable fuel deliverability to the fertilizer and power sectors. The company is majority sponsored by Fauji Foundation, has total shares outstanding of 1,201 million, a free float of 20%, and carried a market capitalization of approximately PKR 912 billion in early 2026. It maintains Shariah compliant status.

For fiscal year 2026, net sales are projected at approximately PKR 202 billion, with profit after tax expected around PKR 59.3 billion, translating into an EPS range of PKR 49.4 to PKR 50.0 and a projected DPS range of PKR 20.0 to PKR 22.2. Looking to fiscal year 2027, net sales are forecast to expand to between PKR 232 billion and PKR 233 billion, with profit after tax projected between PKR 66.4 billion and PKR 86.6 billion, EPS between PKR 55.3 and PKR 72.09, and DPS between PKR 25.0 and PKR 29.0. Notably, only 45% of sales are tied to national gas utilities, keeping the company largely insulated from energy sector circular debt.

Recent corporate briefings outline a strategic expansion beyond core hydrocarbons. The company secured stakes in 23 offshore exploration blocks in the government’s latest bidding round, operating 18 blocks and partnering in five others, marking an aggressive shift into high alpha basins. Through its technology subsidiary Sky47 Limited, it is developing two Tier III certified 5MW data centers in Islamabad and Karachi, a segment expected to contribute 8% to 10% of bottom line earnings once scalable utilization is achieved. Through Mari Minerals Private Limited, the company is pursuing copper and gold exploration in the Chagai district of Balochistan, and it is finalizing acquisition of a 65% working interest and operatorship of the Peshawar Block alongside a 20% working interest in the Eastern Offshore Block C.

Operational momentum in 2026 has been strong. The company reported standalone EPS of PKR 17.6 for the third quarter of fiscal year 2026. Commercial production from the newly integrated Waziristan block is delivering approximately 100 million standard cubic feet per day of gas and 864 barrels of oil per day, while pipeline development at the Pateji field has successfully connected the asset to the national network. Exploratory efforts have driven total reserves and resources to an all time high of 952 million barrels of oil equivalent, supporting a highly secure reserve life.

The core investment thesis for Mari, much like upstream peers Pakistan Petroleum Limited and Oil and Gas Development Company, rests on the regulatory framework governing wellhead pricing in Pakistan. Extracted gas and crude oil prices are pegged directly to international US Dollar benchmarks such as international crude prices, so even though transactions occur entirely in rupees, the underlying value is calculated in USD. Whenever the currency depreciates, wellhead prices adjust upward in rupee terms to align with the peg, effectively transforming the company’s hydrocarbon reserves into a liquid, commodity backed dollar hedge that preserves real asset value for equity holders.

3. Lucky Cement Limited (LUCK)

Among the blue chip conglomerates listed on the PSX, Lucky Cement stands out for safeguarding capital through geographic and industrial diversification. The company has insulated its balance sheet from rupee volatility by establishing fully integrated manufacturing facilities abroad in high demand international markets, holding a 50% stake in these joint ventures through its wholly owned subsidiary, Lucky Investment Holdings.

Its international footprint includes Najmat Al Samawah in Samawah, Iraq, a fully integrated cement plant with a recently commissioned 1.82 million ton per annum clinker line; Al Mabrooka Cement Company in Basra, Iraq, a grinding facility fed directly by clinker from the Samawah plant; and Nyumba ya Akiba in the Democratic Republic of Congo, an integrated cement facility holding a market share of over 50% in its region. Both the Iraqi and Congolese operations benefit from strong localized demand, operating at capacity utilization rates exceeding 90% and commanding premium cement prices above USD 100 per ton. These international joint ventures are major cash generators, contributing approximately 27% of the company’s total Sum of the Parts valuation, and by receiving dividend and earnings streams in stable foreign currencies,Lucky Cement shields its consolidated profitability from domestic shocks.

The domestic business also continues to perform strongly. For the third quarter of fiscal year 2026, standalone sales revenue grew by 9.7% year on year, supported by stronger retention prices.

Standalone gross margins expanded to 36.5%, up from 33.2% in the prior year period, driven by fuel cost optimization and a transition to internal renewable energy. Although standalone earnings declined year on year due to the temporary absence of dividend payouts from power subsidiary LEPCL, consolidated EPS grew robustly by 17.5%, reflecting the strength of the broader portfolio. On the operational front, domestic dispatches reached 1.56 million tons, up 1.71% year on year, while export dispatches surged 10.31% to 788,796 tons, all routed through the South plant, bypassing regional Afghan border closures. Standalone finance costs dropped 14.8% to PKR 244 million, aided by lower interest rates and systematic debt retirement.

Corporate briefings from mid 2026 point to continued capital expenditure and efficiency gains. A new 15 MW solar asset at the Karachi facility brought aggregate solar capacity to 89.3 MW, and combined with 28.8 MW of wind and Waste Heat Recovery systems, renewable sources now power 56% to 57% of the domestic energy mix. A PKR 3.5 billion investment commissioned UC 3.0 technology at the Karachi plant, reducing clinker coal consumption and enabling use of lower cost, high sulfur coal. The company is also executing a 1.6 million ton per annum expansion in the Democratic Republic of Congo, and its power subsidiary LEPCL, which paid PKR 12 billion in interim dividends to the parent during the first nine months of fiscal year 2026, is on track to fully transition from imported coal to local Thar coal by the first quarter of fiscal year 2027. Through joint venture National Resources Limited, the company is progressing resource drilling in Balochistan following a copper and gold discovery, while its automotive arm, Lucky Motor Corporation, entered an exclusive partnership with the GAC Group in April 2026 focused on electric vehicles.Lucky Cement maintains a fortress balance sheet with cash and short term investments of approximately PKR 180 billion, allowing it to self fund expansion while remaining insulated from high domestic borrowing costs.

2. Oil and Gas Development Company Limited (OGDC)

Oil and Gas Development Company Limited is Pakistan’s premier upstream energy giant and the largest exploration and production company in the country, accounting for approximately 49% of national oil production, 28% of gas production, and 34% of LPG production. The company is majority owned by the Government of Pakistan, which holds an 85.02% stake, with the remaining 14.98% distributed among financial institutions, foreign investors, and the general public. It holds the largest and most diversified upstream portfolio in Pakistan, comprising 54 owned and operated joint venture exploration leases and 79 development and production leases, and its hydrocarbon reserve base stands at 755 million barrels of oil equivalent, made up of 5,728 billion cubic feet of gas and 130 million barrels of oil, representing a reserve life of approximately 18 to 20 years. Strategic holdings include a full stake in OGDC Renewable Energy Private Limited, a 33.33% stake in Pakistan Minerals Private Limited, a 25% stake in Pakistan International Oil Limited, and a 20% stake in Mari Energies Limited.

For the nine months ended March 31, 2026, average daily production stood at 32,022 barrels of crude oil, 648 million cubic feet of gas, and 653 tons of LPG.

Recent briefings highlight aggressive exploration and capital restructuring. A milestone discovery at the Baragzai X 01 well in the Nashpa Block, operated with a majority working interest, flowed 13,470 barrels of oil per day and 36.46 million cubic feet per day of gas, representing the country’s largest reserve addition in 16 years, with Phase I already contributing roughly 6,000 barrels per day and total reserve potential of 100 million barrels of oil equivalent. Management is evaluating 80 candidate wells for tight gas potential, which trades at a 40% price premium over standard zonal pricing, alongside plans to drill the KUC 1 horizontal well to test shale gas potential. Backed by IMF mandated energy sector reforms, the company’s cash collection rate reached 130% in the second quarter of fiscal year 2026, making it the only domestic peer to achieve an absolute sequential contraction in total receivables, down 4% in the first quarter. During 2026 the company is expected to receive PKR 92 billion from interest settlements and PKR 90 billion in arrears from Uch Power, and a formal resolution proposal for gas circular debt has been submitted to the IMF. On the diversification front, civil works are progressing at the Reko Diq copper gold project, where the company holds an effective 8.33% indirect stake, and through Pakistan International Oil Limited it retains a 25% stake in Abu Dhabi’s Offshore Block 5.

The company’s status as a devaluation resistant asset stems from the regulatory structure governing upstream pricing. Because wellhead oil and gas prices are formally linked to international crude benchmarks such as Arab Light or Brent and calculated in USD, any depreciation of the rupee acts as an immediate multiplier on local revenues, translating into higher rupee denominated sales and margins. In addition, lower global oil prices improve underlying cash flows by reducing fuel acquisition costs for gas distribution utilities, allowing faster clearance of prior year receivables and outstanding circular debt owed to the company.

1. Systems Limited (SYS)

Systems Limited operates as a natural currency hedge built on a significant mismatch between the denomination of its revenues and expenses. Approximately 91% to 93% of total revenue is denominated in foreign currencies, primarily USD, Euro, and GBP, while only 42% to 43% of the total cost base is linked to foreign currency. Since 82% to 83% of the workforce is based in Pakistan, the remaining 57% to 58% of the cost structure is rupee denominated. Consequently, when the rupee depreciates, revenues scale up sharply in rupee terms while the domestic cost base remains stable, driving automatic margin expansion.

This natural hedge is reinforced by the company’s business model, with approximately 93% of revenue classified as recurring, built on deep, long term enterprise client relationships, many extending beyond five years. The acquisition of Confiz marked a shift away from reliance on indirect associated companies in North America toward direct, high value customer relationships, bringing strong domain expertise in the retail and Consumer Packaged Goods verticals and direct access to premium clients including Walmart, Nordstrom, and Macy’s. While administrative expenses rose due to integration costs, management expects full synergies to materialize gradually.

To manage regional geopolitical uncertainty, management is escalating focus on North America and Europe, while Saudi Arabia remains a prominent growth destination, supported by a favourable commercial environment, minimal visa friction, and bilateral defense and economic agreements that have enabled lucrative contract wins. The company is also positioning itself to lead in the artificial intelligence transition, shifting focus from commoditized custom application development toward complex enterprise applications such as AI driven core banking frameworks and ERP systems, collaborating closely with global technology leaders including Microsoft on joint research and development initiatives. On policy, the federal budget extended the Final Tax Regime for IT exporters by three years, with exporters continuing to pay a concessional 0.25% turnover tax, providing long term policy certainty.

Consolidated results for the first quarter of calendar year 2026 illustrate this momentum in practice.

Net sales for the quarter reached PKR 23,978 million, up 33% year on year, driven by core business expansion together with the Confiz acquisition, which contributed approximately 10% to total revenue during the period. Despite a stagnant US Dollar and domestic wage inflation exceeding 10%, operating profit rose 27% to PKR 3,207 million, while gross margins held stable at 25%, reflecting effective cost control, higher billable utilization, and scale economies. Profit after tax grew 21% year on year to PKR 3,026 million, translating into a basic EPS of PKR 2.05, confirming the company’s capacity to defend and expand its earnings power through periods of local economic and currency adjustment.

Conclusion

Across textiles, energy, cement, and technology, these five companies illustrate the two dominant paths to devaluation resistance available on the PSX. Interloop and Systems Limited generate the bulk of their revenue directly in foreign currency while retaining a largely rupee denominated cost base, producing automatic margin expansion whenever the rupee weakens. Mari Energies and OGDC benefit from a regulatory pricing mechanism that pegs domestic wellhead prices to international US Dollar benchmarks, turning their hydrocarbon reserves into commodity backed currency hedges. Lucky Cement combines both approaches, pairing a resilient domestic cement franchise with an expanding international manufacturing footprint that channels foreign currency dividends back to shareholders. For investors navigating Pakistan’s ongoing currency and inflation challenges, this combination of export orientation, USD indexed pricing, and geographic diversification offers a structural framework for preserving purchasing power through market cycles.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →