Should You Buy KOHC After Its 3QFY25 Results?

Key Takeaways:

• KOHC posted 14% YoY earnings growth in 3QFY25, led by a strong recovery in gross margins.
• Gross margins rose to 39.5% from 29.9% YoY, aided by cheaper coal and lower energy costs.
• 9MFY25 EPS grew 42% YoY to PkR47.1, and KOHC remains a strong contender for further upside.

Kohat Cement posts strong earnings growth in 3QFY25 on margin expansion

Kohat Cement Company Ltd. (KOHC) reported a robust performance in its 3QFY25 results, posting a net profit of PkR2.3bn (EPS: PkR11.9)—a 14% year-on-year increase compared to PkR2.1bn (EPS: PkR10.5) in the same period last year. The growth was driven by a significant improvement in gross margins, offsetting a decline in revenue.

Despite a 4% YoY drop in revenue to PkR8.15bn—mainly due to a 5% decline in dispatches—KOHC managed to improve its gross margins to 39.5% from 29.9% in 3QFY24. This margin recovery was largely supported by lower coal prices, improved retention rates, and reduced electricity costs, as the company increased its reliance on cheaper power sources, including solar and grid power with falling tariffs.

Operating expenses grew by 33% YoY to PkR227mn, while finance costs dropped significantly, down 60% YoY to PkR61mn, reflecting lower interest rates and reduced debt on the balance sheet. Meanwhile, other income declined 15% YoY to PkR921mn due to lower returns on investments.

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KOHC’s effective tax rate stood at 36% for the quarter, slightly higher than the 34% recorded in the same period last year. As a result, net profit for 3QFY25 reached PkR2.34bn, up from PkR2.06bn a year ago.

On a cumulative basis, the company delivered strong results for 9MFY25, with earnings rising 42% YoY to PkR9.2bn (EPS: PkR47.1) compared to PkR6.5bn (EPS: PkR33.2) in 9MFY24. The improvement came on the back of a 22% decline in cost of goods sold, leading to a 41% surge in gross profit for the period.

AKD Securities maintains a ‘BUY’ rating on KOHC, underpinned by the ongoing decline in coal prices, operational efficiency gains, and further integration of low-cost power solutions such as solar energy. Their target price for December 2025 is PkR537/share, which offers a potential upside of 40% from current levels.

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Source: AKD Securities

⚠️ 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 →