Why PAEL’s outlook just got brighter?

Pak Elektron Limited (PAEL) is revving up for a significant year. With a target gross revenue of Rs95 billion in CY25—36% growth year-over-year, the company is leaning heavily into volumetric expansion, promising a bullish outlook for investors in Pakistan’s electrical and appliance manufacturing sector.

1. Targeting Rs95 billion revenue in CY25

PAEL aims to push gross revenues to Rs95bn in CY25, up from Rs19bn in 1QCY25. This jump is fueled by robust growth across its core segments—Appliances (57% of revenue) and Power Division (43%). Management is confident that pricing levels are sustainable, with gross margins in 1QCY25 at 26%, only slightly below last year.

2. Appliance division poised for higher volumes

Pakistan’s household appliance market stands at Rs329bn, with significant room for penetration. Refrigerators (51%), air conditioners (15%), and washing machines (65%) all show growth potential. PAEL already holds notable market shares:

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• Water Dispensers: 25%
• Refrigerators: 19%
• Air Conditioners: 9%
• Washing Machines: 4%

With these penetration levels among the lowest in the region, there’s ample room for expansion in consumer appliances.

3. Strategic partnerships driving margin upside

To capture the premium segment, PAEL is partnering with global giants like Electrolux and Panasonic. These alliances will allow PAEL to locally assemble higher-margin, internationally branded products, replacing or supplementing its in-house lines. This is expected to lift average selling prices and support profitability without putting pressure on end-consumer demand.

4. Export outlook remains positive despite global headwinds

PAEL’s export segment is gaining serious momentum. The company has already secured US$44mn in export orders, out of a US$50mn target for CY25. In 1QCY25, PAEL recorded US$799mn in export revenue, compared to just US$5.8mn in the same period last year.

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Despite potential tariff hikes by the U.S., management believes the company’s short lead times and competitive cost base will help it maintain its edge, especially as competitors like China and Vietnam face steeper tariffs.

5. Power division to benefit from sector recovery

PAEL is the market leader in power transformers with a 90% market share. The power division stands to benefit from:

• Increased real estate activity
• Renewed public-sector spending on grid infrastructure
• Improved liquidity in the power transmission segment

These tailwinds are expected to support consistent order inflow through 2025 and beyond.

Key stats at a glance

PAEL’s roadmap for 2025 combines volume-driven growth, export diversification, and strategic margin expansion. From local appliance market share to global transformer exports, the company appears well-positioned to deliver on its ambitious targets. For investors looking at Pakistan’s industrial and consumer manufacturing space, PAEL presents an attractive, multi-faceted growth story.

Source: JS Global Capital Limited

⚠️ 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 →