Cement Sector in Pakistan Anticipates Growth Amid Economic Shifts

Karachi: Pakistan’s cement industry is poised for growth as demand is expected to rise, driven by improving economic conditions and easing monetary policy, according to a recent analysis by JS Global. The firm has reiterated its “Overweight” stance on the sector, citing a rebound in domestic demand and favorable market dynamics as key factors in the anticipated upturn.

The analysis highlights several companies within the JS Cement Universe as top investment picks, including DG Khan Cement Company (DGKC) with a target price of Rs305, Pioneer Cement (PIOC) at Rs350, Kohat Cement Company (KOHC) at Rs136, Maple Leaf Cement (MLCF) at Rs140, and Cherat Cement Company (CHCC) at Rs472. These companies are projected to offer significant upside potential, ranging from 27% to 34% from current levels.

JS Global’s report suggests that domestic cement demand will recover from its eight-year low in FY25, spurred by increased construction activities and stable macroeconomic conditions. Additionally, strong export prices and efforts to explore new markets are expected to bolster utilization rates.

The report also points to softer international coal prices, which have decreased by 16% year-to-date, alongside increased renewable energy use and cost efficiencies, as factors that will maintain strong profit margins for the sector.

Furthermore, the firm anticipates a reduction in average debt per bag of cement within its universe, projecting a decline from Rs181 per bag in FY25 to Rs82 per bag by FY27. This de-leveraging, coupled with monetary easing, is seen as providing additional financial stability to the sector.

While recent floods in Pakistan could temporarily impact cement dispatches, JS Global expects that subsequent reconstruction efforts will drive demand recovery in the near future.