Is Pioneer Cement Stock Still a BUY Despite Quarterly Earnings Miss?

Key takeaways

• 3QFY25 EPS declined by 19% YoY to Rs. 4.29, below expectations due to lower gross margins.
• Sales fell 8% YoY due to a 7% drop in cement offtake and flat prices.
• Finance cost reduced by 58% YoY, thanks to lower interest rates and a 21% drop in debt.
• BUY rating maintained, with a target price of Rs. 264, offering a 28% upside and 6% dividend yield.

Pioneer cement posts soft 3QFY25 results, but long-term outlook intact

Pioneer Cement Ltd. (PIOC) reported a mixed set of results for 3QFY25. The company posted earnings of Rs. 974 million (EPS: Rs. 4.29), down 19% YoY from Rs. 1.2 billion (EPS: Rs. 5.29) during the same period last year. The earnings were below expectations due to lower-than-anticipated gross margins, primarily caused by higher cost of goods sold (COGS).

Topline under pressure amid lower offtakes

PIOC’s revenue fell 8% YoY to Rs. 7.9 billion, driven by a 7% drop in dispatches to 0.52 million tons. Retention prices remained flat compared to last year, limiting any price-led revenue uplift. On a sequential basis, revenues were down 11% QoQ, reflecting the seasonal impact and weak pricing trends.

Margins disappoint, but cost controls offer relief

Gross margins declined to 25.5%, significantly below the company’s expectation of 35.5% and down from 32.0% YoY. This was primarily due to an increase in COGS to Rs. 5.88 billion, compared to Rs. 5.81 billion in 3QFY24. However, finance cost dropped by 58% YoY to Rs. 286 million, supported by declining interest rates and a 21% reduction in outstanding debt, providing some relief to the bottom line.

9MFY25 snapshot: stable but not stellar

For the nine months, PIOC posted a net profit of Rs. 3.7 billion (EPS: Rs. 16.5), representing a slight decline of 2% YoY. While operational efficiency was evident, the company faced pressure on margins and pricing power. Despite this, a stable dividend payout of Rs. 5/share was maintained.

Valuation remains attractive despite short-term headwinds

While the quarterly performance was underwhelming, the long-term investment thesis remains intact. The easing of coal prices—critical for PIOC, given that over 50% of its power mix is coal-based—is expected to improve gross margins in the coming quarters. Combined with the company’s lower debt burden and expected stabilization in cement prices, earnings growth remains likely.

AKD Securities Limited maintains a ‘BUY’ rating on Pioneer Cement, with a target price of Rs. 264/share for December 2025. This implies a 28% upside potential from current levels, along with a dividend yield of 6%—a compelling case for long-term investors.

Source: AKD Securities Limited