D.G. Khan Cement Eyes Margin Cushion with Lower International Coal Prices

Karachi: D.G. Khan Cement Company Ltd. (DGKC) is expected to see its profit margins cushioned by lower international coal prices, despite challenges such as weaker prices in the North region and disruptions in the supply of Afghan coal, according to a recent press release. The company maintains its Buy rating, though it has adjusted its earnings estimates for FY26E-FY28F downward by 6-7%.

DGKC’s management has noted a significant shift to international coal due to ongoing border issues with Afghanistan, with international coal now comprising 90% of its fuel mix. Currently, international coal prices are around $100-110 per ton, including duties, and are expected to remain stable in the near term.

The company anticipates double-digit growth in domestic dispatches for FY26, building on the 18% growth seen in the first four months of FY26. However, export dispatches are predicted to experience limited growth due to the South plant’s optimal capacity operation and a high base effect from FY25. A strategic shift toward increasing cement exports over clinker is expected to improve export retention prices.

The revised sum-of-the-parts valuation for December 2026 stands at Rs283, a 7% decrease, reflecting adjustments in expectations and market conditions.