Top 3 Stocks by ROE for 2026 According to Foundation Securities

2. SAZEW (Sazgar Engineering Works Limited): Accelerating into the EV Future with a 62.1% ROE

The second-highest ROE stock identified is SAZEW, with a projected ROE of 62.1% for 2026. The investment case for SAZEW is built on the strong brand equity of “HAVAL,” robust margins, and its strategic penetration of the Electric Vehicle (EV) and Hybrid Electric Vehicle (HEV) segments. This aligns with Foundation Securities’ “Outperform” rating on the Autos sector, which is expected to see demand rebound thanks to improving macros and anticipated interest rate cuts.

Key Bullish Triggers for SAZEW

The investment thesis for SAZEW rests on the following key catalysts:

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Leading the EV and HEV Segment: SAZEW is diversifying its product lineup beyond mid-sized SUVs by planning the local assembly of new models, including ORA 03 (EV), ORA 07 (EV), and Tank-500 (HEV). This positions the company to capture new customer bases and lead in the growing new energy vehicle market.

Strategic Expansion: The company has an approved PKR 4.5Bn expansion plan aimed at enhancing production capacity. This capital expenditure is focused on removing operational bottlenecks and optimizing inventory management to meet the escalating demand for its EV models.

New High-Margin Models: While the company’s duty exemptions under its Greenfield status granted through ADP (2016-21) and AIDEP (2021-26) are set to dissipate after FY26, the introduction of higher-margin products like the plug-in hybrid (PHEV) Tank 500 is expected to contain margin decline and support future earnings growth.

⚠️ 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 →