KARACHI: Pakistan’s listed information technology sector reported a 15% year-on-year increase in profitability to 3 billion rupees ($10.7 million) in the first quarter of fiscal year 2027, driven by robust export growth, according to a Sherman Securities sector review.
Computer services exports rose 18% year-on-year to $1 billion during the quarter, with listed IT companies accounting for about 10% of total exports, up from 8% a year earlier. Sector revenue climbed 38% to 35 billion rupees, with exports making up 83% of the total and domestic sales the remaining 17%.
Despite the strong top-line growth, sector gross margins contracted 4 percentage points to 26% from 30%, reflecting rising project execution costs exacerbated by ongoing Middle East challenges.
Systems Ltd. (SYS) posted the largest share of sector revenue, growing 29% year-on-year to 27 billion rupees, propelled by a doubling of revenue in its technology segment to 4.9 billion rupees and its recent acquisition of Confiz, which strengthened its North American presence.
ITANZ recorded the most dramatic revenue growth at 644% year-on-year, attributed to its acquisition of Australian subsidiary ITANZ Infinity and strong software licensing sales. The company’s gross margin reached 87%, the highest in the sector, while its net margin stood at 71%.
NETSOL emerged as a standout performer, with gross margins expanding 12 percentage points to 50% on higher license and service revenue. Earnings per share surged to 3.6 rupees from 0.8 rupees a year earlier, a 4.5-fold increase.
ITANZ’s EPS rose 6.2-fold to 3.1 rupees from 0.5 rupees.
Among other gainers, Avanceon (AVN) and Symmetry (SYM) posted revenue growth of 123% and 104%, respectively. AVN’s growth was driven by retail fuel business projects, though slower order inflows and prolonged project execution cycles in the Middle East weighed on results.
Industrial technology companies recorded the steepest earnings declines, with AVN’s loss per share widening to 1.9 rupees from 0.7 rupees, and its subsidiary Octopus remaining loss-making with a loss per share of 0.2 rupees. Octopus’s gross margin contracted 21 percentage points to 21%.
NETSOL posted modest revenue growth of 7% to 2.7 billion rupees, held back by a 12% decline in subscription and support revenue to 1.2 billion rupees.
SYM’s net margin fell 12 percentage points to 13%, while SYS’s net margin slipped 2 percentage points to 11%. Both companies reported 9% EPS growth, with SYM at 0.18 rupees and SYS at 2 rupees.
Sherman Securities identified global recession, political instability, exchange rate fluctuation and higher-than-expected interest rates as key risks to sector valuations.
