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Lahore: DG Khan Cement (DGKC) held its fiscal year 2025 analyst briefing, projecting a promising outlook with anticipated double-digit growth in local demand by fiscal year 2026, driven by recovery from recent flood disruptions. The company, while underscoring the North as the main growth area, is exploring export markets in the Middle East, with a current focus on the United States for favorable margins.
The management outlined that cement exports are preferred over clinker due to better retention prices, which stand at Rs11,000 per ton for cement and Rs8,000 per ton for clinker. Despite the removal of the EDS, its impact is expected to be minimal.
DG Khan Cement’s power needs are met through a combination of in-house generation and national grid reliance, with 185 MW generated internally against a 113 MW requirement. The company continues to rely on imported coal, priced between US$90-110 per ton, as Afghan coal remains inaccessible.
The first quarter of fiscal year 2026 saw a decline in margins attributed to royalty provisions. Retention prices average at Rs15,800 per ton in the North and Rs15,300 per ton in the South.
Expansion plans are concentrated in the North, contingent upon improved local demand, with the DGP site marked for potential development. The South region has no current expansion plans.
The briefing also highlighted the performance of Nishat paper products, which manufactured 43.2 million paper bags in fiscal year 2025, boosting profitability through a one-time gain from a paper bag line sale, raising revenue to Rs3.29 billion from Rs2.50 billion.
A new subsidiary, DGKC USA LLC, has been established to enhance operations and market penetration in the U.S., although it is not yet operational. DGKC maintains a “Buy” stance, with projections of trading at FY26E/27F PE of 8.3/7.5x, respectively, according to JS Global.