Pakistan Steel 1HFY26 Recovery: International Steels Triples Profit, Mughal Up Sixfold

Pakistan's steel makers turned a corner in the first half of FY26. After a long stretch of weak demand and squeezed margins, two of the larger listed names posted sharp profit recoveries. International Steels, a flat steel producer, tripled its profit on strong sales, while Mughal Iron & Steel, a long steel and rebar maker, grew profit more than sixfold mainly on better margins. The common thread was a recovery in profitability per tonne.

What the steel results showed

International Steels reported profit after tax of Rs1.61 billion for the six months ended 31 December 2025, tripled from Rs534 million a year earlier, when it announced results on 27 January 2026. Revenue rose 38 percent to Rs43.95 billion, gross profit nearly doubled to Rs4.66 billion, and earnings per share climbed to Rs3.71 from Rs1.23. This was a recovery led by both higher volumes and better margins.

Mughal Iron & Steel took a different route to a similar result, reporting on 27 February 2026. Profit after tax surged about 666 percent to Rs1.66 billion, with earnings per share of Rs4.51 against Rs0.65. Revenue actually fell 10.8 percent to Rs41.75 billion, but cost of sales dropped 14.8 percent, lifting gross profit 29.7 percent to Rs5.44 billion and pushing the gross margin to 13 percent. So Mughal's recovery was almost entirely about margins and cost control rather than selling more.

Why margins matter for steel stocks

Steel makers buy raw material, scrap or billets, and sell finished products like coils and rebar. Their profit is the spread between the two, plus the cost of energy to process it. That spread had been thin during the downturn, which crushed profits and pushed weaker players into losses. When scrap and input costs ease and selling prices hold, margins widen quickly, and because steel is a high fixed cost business, profit can jump sharply. Both of these results show that dynamic working in the companies' favour.

Which stocks, and why

International Steels is a clear positive, with a tripling of profit driven by both higher sales and better margins, the healthier combination. Mughal Iron & Steel is also clearly positive, though its gain came almost entirely from margins and cost control while revenue fell, which is a slightly lower quality mix than ISL's. Both mark a real recovery from a weak prior year. This is a more operational, durable recovery than the one at Amreli Steels, whose return to profit leaned on a one off loan restructuring gain.

What to watch

The signals to track are scrap and billet costs, finished steel prices, and energy costs, which together set the margin. Construction and infrastructure demand drives volumes, so the interest rate and development spending matter too. Watch whether the margin recovery holds as input costs move, and whether demand strengthens, since a combination of healthy margins and rising volumes is what would make this recovery durable.