Cement Sector in Pakistan: Signs of a Strong Comeback in FY26
After three years of falling sales, Pakistan’s cement industry is finally showing signs of recovery. The early numbers from July and August 2025 suggest that demand is coming back stronger than expected, driven by lower interest rates, improving construction activity, and easing coal prices.
Cement sales on the rise
- In July 2025, domestic cement sales were up 18% YoY.
- In the first 17 days of August 2025, sales were up 28% YoY.
- If this pace continues, the first two months of FY26 could show 20–25% YoY growth.
For context, cement sales in FY25 were just 37 million tons, compared to the peak of 48 million tons in FY21. This recovery suggests that FY26 sales could reach 42–45 million tons, a 13–20% increase, which would lift plant utilization to 52–54% (from 44% last year).
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What’s driving the rebound?
- Lower interest rates: borrowing costs have come down, encouraging both housing and infrastructure projects.
- Construction revival: government schemes for home financing and loan guarantees are helping demand.
- Stable pricing: cement prices are expected to improve slightly (Rs 1,440/bag in the North, Rs 1,500/bag in the South).
- Cheaper coal: international coal prices have eased to ~$90/ton, while local and Afghan coal have also become more affordable due to duty cuts.
Impact on earnings
This strong demand, along with lower costs, is already leading analysts to revise earnings estimates for cement companies upward by 5–7% for FY26. For example:
- DGKC EPS could go from 23.7 to 26.9 under higher growth assumptions.
- MLCF could move from 13.0 to 14.9.
- KOHC from 71.8 to 79.7.
- Even giants like Lucky Cement (LUCK) could benefit, with unconsolidated EPS reaching ~30.
Why does this matter?
The cement sector is a barometer for Pakistan’s economy. When people are building homes, when infrastructure projects are active, cement demand goes up, and so does economic activity. After a tough few years, FY26 could finally be the year the industry turns around.
The bigger picture
- Upside: If current sales momentum continues, FY26 growth could surpass 12%, much higher than the industry’s forecast of 3–6%.
- Risks: New taxes in the FY26 budget and any jump in coal prices could slow the recovery.
In short, Cement sales are bouncing back in FY26 thanks to stronger demand, lower coal costs, and stable prices. If the trend holds, earnings for cement companies could rise more than expected, making the sector one to watch.
Source: Topline Securities
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⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →
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