Why Interloop Limited should be on your investment radar

Interloop Limited (ILP) has emerged as a compelling investment opportunity in Pakistan’s textile sector, earning a spot in AHL’s top picks for FY25.

ILP is poised for impressive growth, with earnings expected to surge by 17% in FY25.

This robust outlook is underpinned by increasing global demand for textiles as economies recover and the company’s strong position as a preferred supplier for major international brands.

With a projected FY25 PE ratio of 5.6x, ILP offers an attractive entry point for investors.

This valuation is particularly appealing given the company’s growth prospects and market position.

Additionally, ILP boasts a dividend yield of 7.7%, making it an attractive option for income-focused investors. Yes, the dividend yield isn’t as attractive as many other established stocks like EFERT and HUBC. However, the growth potential of ILP outweighs the downside of a low dividend yield.

Significant upside potential

AHL has set a price target of PKR 103.5/share for ILP, indicating a potential upside of 47%. This target underscores the market’s confidence in the company’s future performance and growth strategies.

Interloop is well-positioned to benefit from the government’s industrial package, which is set to reduce energy costs for textile manufacturers.

This cost advantage, combined with the company’s ongoing expansion and diversification efforts, including investments in denim and knitwear segments, strengthens its competitive position.

While the transition to a normal tax regime may pose short-term challenges, ILP’s strong market position and operational efficiencies are expected to help mitigate these impacts.

The company’s ability to navigate market fluctuations adds to its appeal as a long-term investment.