July 21, 2026 (MLN): Interloop Limited (ILP) is on track for an earnings turnaround driven by timely capacity expansion and diversification across its Apparels, Denim, and Hosiery segments, according to JS Global Research.

The JS reiterated a "Buy" rating on the stock with a target price of Rs137, following a management meeting and site visit to the company's new Apparels and Hosiery plants, which reinforced its positive outlook on the company's strategic direction.

Management pointed to several favourable developments, including the removal of super tax for large exporters, uninterrupted electricity supply from the national grid despite the ongoing energy crisis, and reduced export refinancing rates.

The company's new Apparels plant has overcome early-stage hurdles, including large-scale workforce hiring and training. The facility reached roughly 50% capacity utilization in FY26, generating annual revenue of over $100m, and is expected to hit gross-level break-even in FY27. The plant has already posted positive EBITDA margins in recent quarters.

ILP has started supplying a full range of apparel products to Adidas, positioning itself as a one-stop clothing partner for the brand. It already supplies hosiery items to Nike but has not yet extended apparel supply to that relationship.

Management also noted that the broader shift in sourcing by US and EU buyers toward Asian suppliers continues to benefit Pakistani exporters, though India remains a notable competitive threat particularly with the anticipated EU-India Free Trade Agreement expected to take effect next year.

ILP's Denim plant currently has an annual capacity of over 12m pieces and is running at 68% utilization, with plans to raise capacity to 18m pieces in FY27 in line with rising demand.

The segment's edge lies in its focus on fashion-forward designs alongside standard denim products, and it has begun generating positive operating margins in recent quarters.

The Hosiery segment has completed a 25% capacity expansion, allowing the company to bring previously outsourced orders in-house.

ILP remains among the world's leading sock suppliers to global brands including Nike, Puma, Adidas, and FILA, with a broad product range spanning basic, sports, and medicated socks.

Management flagged India's potential entry into the EU hosiery market as a key long-term risk, noting that ILP's manufacturing footprint across Egypt, North America, the EU, and Sri Lanka should help mitigate country-specific risk for customers.

The company's expansion into Apparels and Denim also shows management's view that hosiery demand growth is gradually maturing.