Should investors worry about FCCL’s weaker-than-expected Q3?

Key takeaways:

• EPS rises to Rs. 0.87, up 21% YoY, but below street estimates
• Gross margins improve to 32% on a better power mix and fuel efficiency
• No dividend announced, in line with expectations

Fauji Cement Company Ltd. (FCCL) announced its financial results for 3QFY25, posting earnings of Rs. 2.14 billion (EPS: Rs. 0.87), marking a 21% year-on-year increase. While the result showed decent growth, it came in below industry expectations, primarily due to higher-than-expected finance costs and lower-than-anticipated gross margins.

The company did not announce any dividend for the quarter, which was largely in line with investor expectations.

Gross margins improve, but QoQ pressure is evident

FCCL reported gross margins of 32% in 3QFY25, up from 28% in the same period last year. The YoY margin expansion was driven by higher domestic dispatches, a greater share of renewable energy in the power mix, and lower fuel costs. However, margins were down from 36% in 2QFY25, reflecting some cost pressures and price softness.

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Revenue shows modest growth on yearly basis

Net sales increased just 1% YoY to Rs. 19.3 billion, as the impact of higher dispatches was largely offset by lower retention prices. On a quarter-on-quarter basis, revenue was down 22%, due to a decline in domestic sales volumes.

• Domestic dispatches: 1.15mn tons (↑4% YoY, ↓13% QoQ)
• Export dispatches: 0.04mn tons (↓53% YoY, ↓76% QoQ)

Operating profits and costs

• Operating profit stood at Rs. 4.95 billion, up 16% YoY but down 34% QoQ
• Distribution expenses dropped 8% YoY
• Finance costs declined 11% YoY to Rs. 1.46 billion, thanks to reduced borrowing and lower interest rates
• Other income dropped 29% YoY, contributing to the earnings miss

Higher taxation impacting net profit

Taxation increased to Rs. 1.35 billion (effective tax rate: 39%), up from 33% in the same quarter last year, further pressuring bottom-line growth.

Valuation snapshot

FCCL is trading at a forward P/E of 6.1x for FY26 and 5.3x for FY27, which may offer value if margins stabilize and volume growth continues.

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Source: Topline Securities (Private) Limited

⚠️ 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 →