Top 3 sectors to trade in according to analysts

2. Cement sector

Average EPS Growth: 30%

Sector outlook:

The cement sector is poised for a positive FY26 as infrastructure and housing demand gain momentum. Domestic cement offtake is expected to grow by 6% year-on-year, supported by the government’s renewed emphasis on infrastructure development.

The FY26 federal budget allocates PKR 4.2 trillion to the Public Sector Development Programme (PSDP), marking a 15% increase over last year and signaling a strong pipeline of construction activity. Additionally, pro-housing measures such as the abolishment of FED on first-time property purchases, tax credits on low-cost housing loan interest, and reduced withholding tax on property transactions are likely to unlock fresh demand from the residential segment.

From an investment standpoint, the sector’s earnings outlook remains upbeat. Companies are expected to benefit from improving gross margins, driven by stronger retention prices, lower fuel and power costs, and anticipated interest rate cuts, which will ease financial expenses.

The recent earnings trends already reflect this shift, with several players like DGKC, CHCC, and FCCL showing robust EPS growth. As both top-line growth and cost-side efficiencies converge, FY26 could prove to be a strong year for well-managed cement companies, particularly those with lean balance sheets and regional pricing power.

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The latest earnings growth figures across the cement sector reveal a mixed but mostly positive outlook. FCCL and CHCC show strong growth at 56% and 54% respectively, indicating improving profitability despite limited stock price momentum. KOHC and PIOC, both rated ‘Buy’, report respectable earnings growth of 35% and 23%, which aligns with their upward stock price revisions. These numbers suggest operational or pricing efficiencies kicking in post-cost normalization.

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On the other hand, LUCK, despite being the industry giant, shows only a 15% EPS increase, solid but not enough to spark bullish calls from analysts, especially with a high valuation and broader index-linked movements. MLCF reports 33% growth, a strong number but possibly weighed down by its smaller size and limited dividend profile. Overall, earnings growth in the sector is robust in many names, but market sentiment appears selective, rewarding companies with cleaner balance sheets, dividend potential, or room for further margin gains.

⚠️ 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 →