Zarea listed as a cement and steel marketplace. Its profit now comes from elsewhere
Zarea, a Lahore marketplace for cement, steel and farm commodities, doubled its profit in FY26, but other income did much of the work and the shares have fallen by more than half from their peak.
Zarea Limited made Rs1.39 billion in profit in the year to June 2026, about twice what it earned the year before. On Friday 16 October its shares closed at Rs37.93, less than half the Rs79.50 they touched at their 52 week high. Zarea is a Lahore marketplace where builders, factories and traders order cement, steel and agricultural commodities from suppliers, and its February 2025 IPO was the first of that year on the main board of the Pakistan Stock Exchange (PSX).
The gap between those two facts is the story. A closer reading of the filings suggests the business that investors bought at the IPO has changed shape since, and that the profit now owes a great deal to things other than marketplace fees.
How a cement and steel marketplace earns its fee
Zarea was incorporated on 16 September 2020 as Vision 2A Private Limited and began operating that October, according to its prospectus. Its founder and chief executive, Ali Alam Qamar, was educated at Aitchison College in Lahore, then SOAS University of London and the University of Cambridge, the prospectus says. The document also records that his mother, Misbah Momin, is a sponsor of the company, and the PSX lists her as chairperson.
The pitch is simple. A buyer places an order on zarea.pk or the app. Zarea's sales team runs a know your customer check, arranges logistics and confirms the order with a supplier, who delivers directly. Zarea keeps a platform usage fee of 1% to 10% of the transaction value, depending on the commodity, typically collected at delivery. In the prospectus this was the core of the company: a marketplace that did not hold physical inventory.
On that model the early numbers were striking. Unconsolidated net revenue rose from Rs11.8 million in FY21 to Rs441.8 million in FY24, and net profit from Rs5 million to Rs292.8 million, according to the prospectus. Even then, Rs160.7 million of the FY24 revenue was commodity sales rather than fees, an activity the prospectus labelled secondary and non core. A Zone Enterprise licence from the Special Technology Zones Authority gives Zarea a ten year tax exemption running to 10 December 2033, and the Pakistan Credit Rating Agency (PACRA) notes that profitability continues to benefit from it.
An IPO that priced above its floor
The offer was a 100% book building run by Topline Securities and Growth Securities on 10 and 11 February 2025, with a floor price of Rs16. ProPakistani reported that it cleared at Rs16.5, drew about Rs2 billion of bids and was oversubscribed 1.9 times. Zarea sold 62.5 million shares, 23.81% of the company, and raised Rs1.03 billion. The PSX says the shares were listed on 28 February 2025.
The prospectus was specific about the money. It set aside Rs450 million as working capital to pay suppliers of seasonal agricultural biomass in advance, naming rice husk, corn cob, wheat straw and bagasse. It budgeted Rs240 million for logistics, including nine prime mover trucks, to bring delivery in house instead of leaving it to third party hauliers. At the listing ceremony, as The News reported, Qamar said Zarea aimed to take 1% to 2% of a commodities market the paper valued at more than $20 billion within seven to ten years. "This listing is just the beginning," he added.
For comparison the prospectus pointed to India's OfBusiness, which it said last raised $325 million at a $5 billion valuation in December 2021, and listed Bazaar, Dastgyr and Zaraye as local rivals. By July 2025 the stock had reached Rs24.50, according to startup.pk. In the year to this week it climbed as high as Rs79.50, then slid to Rs37.93, still more than double the IPO price.
Where the profit comes from now
The results Zarea filed on 30 September 2026 show consolidated revenue of Rs2.77 billion, up 107%, and gross profit of Rs887 million. After selling and administrative costs, operating profit was Rs641 million. Net profit was Rs1.39 billion, or Rs5.31 a share. The difference is other income of Rs873 million, which in the company's own bridge from revenue to profit is larger than the operating profit itself, less Rs71 million of finance cost and a Rs49 million levy.
PACRA filled in the detail for the first nine months of FY26. Of Rs2.11 billion in revenue, Rs1.79 billion, about 85%, came from trading agricultural commodities and only Rs317 million, about 15%, from platform fees. Gross margin fell to 27.8% from 45.8% a year earlier. Other income of Rs493 million, which PACRA describes as mark to market gains on short term equity and mutual fund investments, was equal to about 58% of PACRA's Rs852 million profit before interest and tax, by our arithmetic. The prospectus had described commodity trading as a secondary activity, not the core.
The balance sheet has moved the same way. Inventory reached Rs733 million at year end, up 94%. Zarea issued a Rs1 billion Sukuk during the year and redeemed it on 23 July. On 7 October it announced a Rs2 billion short term Sukuk, rated A1 by PACRA and privately placed. The company says the proceeds strengthen liquidity and diversify funding. PACRA affirmed Zarea at A minus on 27 August 2026, tying the rating to its ability to sustain margin resilience and strengthen liquidity buffers, and noting the fall in margins, the support from other income and a rise in inventory days to about 82.
What Zarea has to prove next
At Rs37.93 the market values Zarea at about Rs9.96 billion, according to the PSX, or about seven times FY26 earnings per share. That is a low multiple for a company whose profit has doubled. One reading is that investors are discounting how much of the profit will repeat: investment gains can reverse, and a trading book needs capital that a fee marketplace does not.
Control is tight. PACRA reports that Qamar holds about 41.5% and another 34.3% through Goldfinger, a company he ultimately owns, so the promoters hold about three quarters of the shares. Shareholders will be asked at the annual meeting on 28 October to approve a Re1 final dividend. Zarea has set up a Dubai subsidiary, Zarea Commerce FZCO, and moved into packaging corn silage and biomass, though PACRA's report gives no separate revenue or margin for agri biomass.
The test is whether the Rs317 million of fee income, the part of the business that looks like software, grows faster than the trading around it. If it does, Zarea resembles the marketplace it described in 2025. If not, it is a commodity trader with an app and a tax exemption that ends in 2033.
Reported from Zarea's prospectus, PSX filings and results announcement, PACRA's rating report and coverage in ProPakistani, The News and startup.pk.
