3. Auto Sector <\/h2>\n\n\n\n
Average EPS Growth: 28%<\/em><\/p>\n\n\n The auto sector is poised for a strong earnings rebound in FY26, with sector-wide profits expected to rise by 61% year-on-year<\/strong> to reach PKR 9.5 billion<\/strong> by the quarter ending June 2025. This growth is largely driven by a 17% YoY increase in vehicle sales<\/strong>, reflecting improved macroeconomic conditions, better consumer sentiment, and the easing of supply-side disruptions. The sector\u2019s topline is projected to grow by 42% YoY<\/strong> to PKR 99.9 billion<\/strong>, highlighting the dual benefit of volume recovery and stable pricing. <\/p>\n\n\n\n Key players like INDU<\/strong> <\/a>and SAZEW<\/strong> <\/a>are already delivering strong earnings momentum, while HCAR<\/strong> <\/a>is expected to post a sharp turnaround with a 146% jump in earnings<\/strong>.<\/p>\n\n\n\n Supporting this earnings revival are improving margins and a favorable interest rate environment. Sector-wide gross margins are projected to rise to 15.7%<\/strong>, up from 12.4% last year<\/strong>, aided by declining international CRC\/HRC prices<\/strong> and better cost absorption due to higher volumes. <\/p>\n\n\n\n Moreover, finance costs are expected to fall sharply, down 71% YoY to PKR 105 million<\/strong>, as automakers deleverage and benefit from lower borrowing rates. With multiple tailwinds in place, FY26 is shaping up to be a revival year for the auto sector, particularly for companies with lean cost structures and strong product pipelines.<\/p>\n\n\n\n Earnings growth across the auto sector shows a mixed picture, with HCAR<\/strong> reporting a -21% decline in EPS<\/strong>, reflecting the lingering impact of supply chain issues, cost pressures, or a slowdown in unit sales. However, its FY26 outlook appears much brighter with an expected 146% surge in EPS<\/strong>, suggesting a potential turnaround, possibly driven by improved volumes or margin recovery. <\/p>\n\n\n\n In contrast, INDU<\/strong> and SAZEW<\/strong> are already delivering strong growth. INDU<\/strong> posted an 18% EPS increase<\/strong> and is forecast to grow by 20%<\/strong>, signaling stable performance and resilience in high-end vehicle demand. SAZEW<\/strong> stands out with 61% EPS growth<\/strong>, expected to continue with another 23% rise<\/strong>, reflecting strong operational execution and potentially favorable product mix.<\/p>\n\n\n\n These trends suggest a broader recovery in the auto sector heading into FY26, supported by easing import restrictions, better inventory flow, and stabilizing economic indicators. Both INDU<\/strong> and SAZEW<\/strong> are rated Buy<\/em>, thanks to solid earnings visibility and relatively attractive forward valuations, especially with SAZEW<\/strong> trading at just 4.4x forward P\/E<\/strong>. HCAR<\/strong>, while still rated Neutral<\/em>, could see sentiment shift if its projected earnings rebound materializes. The sector overall appears to be turning a corner, but sustainability of growth will depend on interest rates, exchange rate stability, and consumer financing trends.<\/p>\n\n\n\n\n\n\n\n Average EPS Growth: 30%<\/em><\/p>\n\n\n 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<\/strong>, supported by the government’s renewed emphasis on infrastructure development. <\/p>\n\n\n\n The FY26 federal budget allocates PKR 4.2 trillion<\/strong> to the Public Sector Development Programme (PSDP), marking a 15% increase<\/strong> 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<\/strong>, tax credits on low-cost housing loan interest<\/strong>, and reduced withholding tax on property transactions<\/strong> are likely to unlock fresh demand from the residential segment.<\/p>\n\n\n\n From an investment standpoint, the sector\u2019s earnings outlook remains upbeat. Companies are expected to benefit from improving gross margins<\/strong>, driven by stronger retention prices<\/strong>, lower fuel and power costs<\/strong>, and anticipated interest rate cuts<\/strong>, which will ease financial expenses. <\/p>\n\n\n\n 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.<\/p>\n\n\n\n The latest earnings growth figures across the cement sector reveal a mixed but mostly positive outlook. FCCL<\/strong> <\/a>and CHCC<\/strong> <\/a>show strong growth at 56%<\/strong> and 54%<\/strong> respectively, indicating improving profitability despite limited stock price momentum. KOHC<\/strong> <\/a>and PIOC<\/a><\/strong>, both rated \u2018Buy\u2019, report respectable earnings growth of 35%<\/strong> and 23%<\/strong>, which aligns with their upward stock price revisions. These numbers suggest operational or pricing efficiencies kicking in post-cost normalization.<\/p>\n\n\n\n On the other hand, LUCK<\/a><\/strong>, despite being the industry giant, shows only a 15%<\/strong> EPS increase, solid but not enough to spark bullish calls from analysts, especially with a high valuation and broader index-linked movements. MLCF<\/strong> <\/a>reports 33%<\/strong> 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.<\/p>\n\n\n\n\n\n\n\n Average EPS Growth: 66%<\/em><\/p>\n\n\n\n Despite its structural challenges, the pharmaceutical sector in Pakistan is entering FY26 with strong growth momentum<\/strong>, underpinned by resilient demand and improving earnings. The sector has achieved an impressive 18% CAGR over the past four years<\/strong>, with CY24 revenues reaching PKR 1,007 billion<\/strong>, supported by over 678 companies<\/strong>, including 26 multinationals<\/strong>. <\/p>\n\n\n\n Local manufacturers dominate the market with a 67%+ share<\/strong>, while the top 10 firms control nearly half of total industry revenue<\/strong>. This concentration highlights the competitive edge of key players like AGP<\/strong> and SEARL<\/strong>, which continue to expand earnings, reporting 57%<\/strong> and 87% EPS growth<\/strong>, respectively, despite the sector’s underdeveloped R&D ecosystem and reliance on imported New Chemical Entities (NCEs).<\/p>\n\n\n\n Looking ahead to FY26, the sector\u2019s earnings outlook remains upbeat, thanks to a combination of volume growth<\/strong>, margin strength<\/strong>, and operational efficiencies<\/strong>. The dominance of cost-effective sourcing strategies<\/strong>, especially by local firms, has helped maintain superior gross margins<\/strong>, even as 85% of active pharmaceutical ingredients (APIs)<\/strong> are imported. <\/p>\n\n\n\n With expectations of 30\u201348% EPS growth<\/strong> in leading names, improving macroeconomic stability, and likely FX stabilization, the investment case for select pharma stocks strengthens. However, long-term expansion will hinge on greater local API production and better IP protections to spur innovation and reduce supply-side vulnerabilities.<\/p>\n\n\n\n The latest earnings growth data for the pharmaceutical sector reveals strong momentum, particularly from SEARL<\/strong> <\/a>and AGP<\/a><\/strong>, both of which have delivered standout performances. SEARL<\/strong> leads with an impressive 87%<\/strong> EPS growth, pointing to a sharp recovery possibly driven by cost efficiencies, price increases, or favorable base effects. <\/p>\n\n\n\n The company is expected to maintain this trajectory with a 48%<\/strong> growth forecast, reflecting growing investor confidence in sustained profitability. AGP<\/strong>, meanwhile, posted a solid 57%<\/strong> EPS increase and is projected to grow earnings by another 30%<\/strong>, indicating both top-line strength and improving operational margins.<\/p>\n\n\n\n These figures suggest that the sector is entering FY26 on strong footing. While both companies are currently rated Neutral<\/em>, the continued earnings momentum could pave the way for potential rerating, especially as macroeconomic stability and regulatory clarity improve. <\/p>\n\n\n\n The earnings visibility for both AGP and SEARL is further supported by their relatively stable product portfolios and improving cost structures. However, the sector remains sensitive to pricing caps, currency movements, and input cost volatility, which investors will closely watch despite the encouraging growth trends.<\/p>\n","protected":false},"excerpt":{"rendered":" Wondering where the research houses want their clients to put their money in? If you are a trader and looking to maximize your gains<\/p>\n","protected":false},"author":9252,"featured_media":10189,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[200,199,186,41,170,84,45,10,93,214,63,162],"class_list":["post-10167","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-psx-blog","tag-agp","tag-chcc","tag-dgkc","tag-fccl","tag-hcar","tag-indu","tag-kohc","tag-luck","tag-mlcf","tag-pioc","tag-sazew","tag-searl"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-3-sectors-for-FY26-1140x445.jpg",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-3-sectors-for-FY26-463x348.jpg",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-3-sectors-for-FY26-300x188.jpg",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-3-sectors-for-FY26.jpg",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10167","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/9252"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=10167"}],"version-history":[{"count":3,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10167\/revisions"}],"predecessor-version":[{"id":10190,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10167\/revisions\/10190"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/10189"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=10167"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=10167"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=10167"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"auto](\"https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/02\/auto-sector-1-1024x640.jpg\")
<\/figure>\n<\/div>\n\n\nSector outlook: <\/h3>\n\n\n\n
2. Cement sector<\/h2>\n\n\n\n
![\"cement\"](\"https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/06\/Top-X-Stocks4-1024x640.jpg\")
<\/figure>\n<\/div>\n\n\nSector outlook: <\/h3>\n\n\n\n
1. Pharma Sector<\/h2>\n\n\n\n
![\"\"](\"https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/pharma-sector-psx-7-1024x640.jpg\")
<\/figure>\n\n\n\nSector outlook: <\/h3>\n\n\n\n