Top 3 Stocks That Could Skyrocket In 2027 Earnings Growth
Introduction:
Pakistan’s industrial sector is showing early signs of recovery, creating opportunities for companies that have invested in cost optimization, capacity expansion, and market protection measures. Among the notable beneficiaries are EPCL, ISL, and MUGHAL, each pursuing different strategies to improve earnings growth. EPCL is focused on reducing energy costs and benefiting from improving chemical pricing dynamics, ISL is capitalizing on favourable regulatory changes and recovering demand in flat steel markets, while MUGHAL is expanding production capabilities and lowering power costs through captive generation. Together, these developments position all three companies to potentially benefit from an improving business environment through 2026 and beyond.
3. MUGHAL – Mughal Iron & Steel Industries Limited
Expected Average 2027 EPS Growth Rate 47%
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MUGHAL continues to advance several strategic initiatives aimed at improving profitability, reducing production costs, and expanding its presence in value-added steel products. With an expected average EPS growth rate of 47% through 2027, the company is focusing on operational efficiency and market share expansion.
Captive Power Project To Reduce Energy Costs
One of the company’s most important ongoing projects is the commissioning of a 36.5 MW coal-based captive power plant, which is expected to achieve commercial operations during the second half of fiscal year 2026.
Management expects this project to significantly reduce electricity costs. Power costs are projected to decline to approximately PKR 25–27 per unit in 2026 and further decrease to around PKR 20 per unit in 2027 as operating efficiencies normalize. This compares favourably with prevailing grid power rates of PKR 35–38 per unit.
Bar Mill Upgrade Targets Higher Market Share
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The company is also undertaking a PKR 2–3 billion modernization of its existing bar mill, with completion expected in late fiscal year 2026. The upgrade will convert the facility into a multipurpose mill capable of producing both rebars and mini-sections simultaneously.
Following completion, MUGHAL expects its market share in the sections segment to increase from 62% to more than 80%. The company is also benefiting from operational synergies by internally consuming residual non-ferrous scrap, which is expected to fulfil 8–10% of ferrous scrap requirements and support margins.
Management remains focused on high-margin ferrous products that provide approximately 100% value addition, where finished product prices are substantially higher than raw material costs.
Strong Start To FY26
The company reported a profit after tax of PKR 997 million in 1QFY26, translating into earnings per share of PKR 2.7.
Gross margins improved to 17%, representing an 8-percentage-point increase year-over-year, supported by lower raw material costs. Profitability was further strengthened by a 49% decline in finance costs and a 35% increase in other income, highlighting the positive impact of lower leverage and improving operating conditions.
2. ISL – International Steels Limited
Expected Average 2027 EPS Growth Rate 58%
ISL is entering fiscal year 2026 with several positive industry and company-specific developments that are supporting demand recovery and improving its competitive position. With an expected average EPS growth rate of 58% through 2027, the company is benefiting from regulatory support, market share gains, and lower operating costs.
Regulatory Measures Strengthen Competitive Position
A major development for the flat steel sector is the imposition of a 40.5% anti-dumping duty on Chinese Galvalume products. Since Galvalume serves as a substitute for ISL’s products, the measure is expected to redirect a meaningful portion of demand toward domestic producers.
The competitive landscape has also improved following tighter sales-tax enforcement in the erstwhile FATA/PATA regions. The implementation of a 10% sales tax on flat steel has reduced the cost advantage previously enjoyed by undocumented market participants.
Cost Optimization And Export Expansion
Federal Budget 2026 measures have widened ISL’s effective duty spread from 5% to 7.5%. This was achieved by lowering import duty on HRC to 2.5% while keeping duties on finished products unchanged, creating a more favorable margin environment.
The company is also strengthening its energy efficiency strategy. Its solar captive plant is expected to meet 10% of total power requirements in FY26, while 75% of current electricity needs are already supplied through in-house generation facilities.
On the export front, ISL has secured CE, SASO, and REACH certifications, enabling access to markets in Europe, Malaysia, and the Middle East. Management aims to increase exports to 25% of total revenue over the long term.
Demand Recovery Supports Growth
Demand trends have improved across key end-user industries. Two-wheeler sales increased 33% year-over-year during the first five months of FY26, while refrigerator and deep freezer sales grew by 22% and 35%, respectively, during the first quarter.
The company has increased its market share in galvanized and cold-rolled products from 20% to 23% over the past year. Lower inflation, reduced policy rates, and declining finance costs are further supporting demand recovery and improving earnings potential.
1. EPCL – Engro Polymer & Chemicals Limited
Expected Average 2027 EPS Growth Rate 81%
Key Corporate Updates
EPCL’s latest corporate briefing highlighted several developments that could shape the company’s future performance. The most notable is the ongoing due diligence process by Lotte Chemical Pakistan Limited for a potential acquisition of the 56% majority stake currently held by Engro Holdings. Management expects a definitive decision on the transaction by June 2026.
In a separate development, Mitsubishi Corporation has signed an agreement to divest its entire 11% stake to Liberty Daharki Power Limited and Seagreen Enterprises (Pvt) Ltd.
Major Energy Cost Reduction Initiative
The company is undertaking a PKR 10 billion project to shift its power supply from captive gas-based generation to the national grid. This move is expected to significantly reduce electricity costs from approximately PKR 47 per unit to around PKR 27–32 per unit.
Alongside this transition, EPCL is also progressing with a 2MW on-site solar project, with the first phase of solar panels scheduled to become operational immediately. These initiatives are expected to improve operating efficiency and strengthen margins.
Operational and Market Developments
Operational testing confirmed that the Hydrogen Peroxide facility can produce 31.5kta, exceeding its original rated capacity of 28kta. This provides additional production flexibility and potential revenue opportunities.
The company has also secured anti-dumping protection for five years against imports from seven countries. Furthermore, inquiries remain active regarding dumped PVC imports from the United States and Indonesia. Product pricing showed signs of recovery during the first quarter of 2026 after China removed export tax rebates.
1QCY26 Financial Performance
| Metric | 1QCY26 |
|---|---|
| Net Sales | PKR 22.18 billion |
| Gross Profit | PKR 2.54 billion |
| Operating Profit | PKR 1.93 billion |
| EBITDA | PKR 2.93 billion |
| Profit After Tax | PKR 371 million |
| EPS | PKR 0.41 |
The quarter marked a return to profitability, with EPCL reporting earnings after four consecutive loss-making quarters. The recovery was supported by improving market conditions and stronger product pricing.
Outlook
With substantial energy cost savings expected from the grid transition, growing renewable energy integration, improving product prices, and favorable trade protections,EPCL appears positioned for a stronger earnings trajectory. The company’s expected average EPS growth rate of 81% through 2027 reflects the potential impact of these operational and strategic improvements.
Conclusion
The latest corporate briefings highlight a common theme across EPCL,ISL, and MUGHAL: stronger operational efficiency and improving industry fundamentals. EPCL is targeting significant energy savings and has returned to profitability. ISL is benefiting from regulatory support, market share gains, and growing export opportunities, while MUGHAL is executing major projects that could enhance margins and strengthen its dominance in value-added steel products. With demand recovery, lower financing costs, and strategic investments underway, all three companies are focused on creating a stronger earnings base and supporting long-term growth expectations through 2027.
⚠️ 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 →
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