FED on Mineral Water Abolished, Exporters' Super Tax Removed: Positive for Nestle, IT, and Textile Stocks

What the budget amendments changed for beverages and exporters

The government has introduced amendments to the Finance Bill 2026, bringing two key changes for businesses. Firstly, the 20 percent Federal Excise Duty (FED) has been removed from specific beverage categories, including mineral waters, aerated waters, and certain hydration or electrolyte drinks with artificial sweetener or sugar content below 5g/100 ml. Secondly, the Super Tax previously imposed on exporters has been abolished under the amended bill. These changes aim to provide relief to both consumers and export-oriented industries.

Why it matters for Food & Personal Care, IT, and Textile stocks

The abolition of FED on mineral waters and specific low-sugar beverages is a direct positive for companies operating in the Food & Personal Care sector that produce these items. It could lead to lower retail prices, potentially boosting sales volumes, or allow companies to improve their profit margins. For the Technology & Communication and Textile Composite sectors, the removal of the Super Tax on exporters is a significant development. This tax directly impacted the profitability of companies earning foreign exchange, so its abolition means a direct reduction in their tax burden, improving their net earnings.

Which stocks, and why

The changes have a direct impact on several listed companies:

• Nestle Pakistan (NESTLE): As a major producer of mineral water (Nestle Pure Life) and other specified beverages, the abolition of the 20 percent FED is a clear positive. This could either allow the company to reduce prices and stimulate demand, or retain the benefit to improve its margins, directly boosting its profitability from these product lines.
• Systems Limited (SYS): As Pakistan's largest IT exporter, Systems Limited will directly benefit from the abolition of the Super Tax on exporters. This tax relief will improve its net income, enhancing its financial performance.
• Avanceon (AVN): This company is involved in industrial automation and export technology. The removal of the Super Tax on exporters will directly reduce its tax liability, positively impacting its earnings.
• TRG Pakistan (TRG): As a holding company with significant stakes in global BPO and tech firms that generate foreign exchange, TRG Pakistan's underlying value and earnings will see a positive impact from the Super Tax abolition for its export-oriented subsidiaries.
• NetSol Technologies (NETSOL): A software exporter, NetSol Technologies will also see a direct benefit from the Super Tax removal, which will improve its after-tax profits.
• Interloop (ILP): As one of the largest hosiery and denim exporters, Interloop will directly gain from the abolition of the Super Tax. This will lead to a better bottom line for its export operations.
• Nishat Mills (NML): The flagship textile exporter of the Nishat group, Nishat Mills will experience a direct positive impact on its profitability due to the removal of the Super Tax on its export earnings.
• Gul Ahmed Textile (GATM): This company, a significant player in home and apparel textiles with a strong export focus, will also benefit from the Super Tax abolition, improving its net earnings from exports.
• Kohinoor Textile (KTML): As a yarn and fabric exporter, Kohinoor Textile Mills will see a direct reduction in its tax burden, which will positively affect its profitability.

What to watch

Investors should monitor the upcoming financial results of these companies to see the actual impact of these tax changes on their reported earnings and margins. For beverage companies, tracking sales volumes and pricing strategies for mineral waters and specific low-sugar drinks will be important. For exporters, observing their effective tax rates and net profit margins in future quarters will confirm the benefits of the Super Tax abolition. Any further amendments or clarifications to the Finance Bill could also influence the long-term outlook.