Pakistan’s cement sector is beginning to emerge from one of its most challenging periods in recent history. High energy costs, elevated interest rates, weak construction activity, and pressure on export markets weighed heavily on profitability across the industry. However, a handful of producers used this period to strengthen their balance sheets, invest in operational efficiency, and prepare for the next phase of growth. As economic conditions gradually improve, these investments are starting to translate into stronger earnings and clearer growth visibility. This report focuses on three leading North-region cement producers: Kohat Cement<\/strong>, Fauji Cement, and D.G. Khan Cement. While each company is pursuing a different strategy, all are executing projects that could materially improve their long-term earnings potential. Kohat Cement<\/strong> is nearing completion of a captive power project that is expected to significantly lower production costs. Fauji Cement is benefiting from a large renewable energy platform and pursuing strategic expansion opportunities. D.G. Khan Cement<\/strong> is undertaking a landmark capacity expansion project backed by a strong financial position. Together, these companies represent distinct but compelling ways to participate in the evolving recovery of Pakistan’s cement sector.<\/p>\n\n\n\n Expected Average 2027 EPS Growth Rate 19<\/p>\n\n\n\n Net sales for the third quarter of fiscal year 2026 held broadly steady year on year at PKR 8,157 million. The flat top line masked an important underlying improvement, average retention prices rose by 5%<\/strong> compared to the same period last year, reaching PKR 760 per bag. This pricing gain reflects stronger local demand dynamics and management’s deliberate decision to step back from low-retention export business. All 536,944 tons of dispatches during the quarter were sold into the domestic market, with zero export volume recorded for the period. Quarterly profitability was pressured by a meaningful decline in other income and some compression in gross margins. The more representative picture of earnings capacity is the nine-month cumulative result, where the company delivered a Profit After Tax of PKR 4,534 million and a cumulative Earnings Per Share of PKR 22.58, a figure that reflects the underlying strength of the core cement operation throughout the first three quarters of the fiscal year.<\/p>\n\n\n\n 30 MW Coal Power Plant \u2014 The Primary Cost Catalyst<\/strong><\/p>\n\n\n\n The most significant near-term development for KOHC<\/a><\/strong> is a new 30 MW coal-fired captive power plant currently in the final stages of completion, slated for commissioning by the close of fiscal year 2026. This plant is the company’s primary cost-optimisation lever and is specifically designed to drastically reduce dependence on expensive national grid electricity. Once operational, it is expected to drive meaningful margin expansion across the business, as power is one of the largest variable costs in cement manufacturing. KOHC<\/a><\/strong>‘s location in Nowshera, Khyber Pakhtunkhwa, places it just 100 kilometres from the Torkham border crossing and 75 kilometres from Darra Adam Khel. This geography provides access to Afghan and local coal at inland freight costs significantly lower than those faced by competitors based in Punjab. The energy mix strategy is being continuously optimised through this built-in locational advantage, with management focused on transitioning to cheaper fuel sources as part of a broader efficiency programme. The company maintains a cash-rich balance sheet that provides meaningful downside protection for investors and the strategic flexibility to fund future capacity or diversification projects without taking on additional debt. Reports from March and April 2026 indicate that the company continues to trade at a significant discount to its brownfield replacement cost, making it one of the most attractive value-to-profitability combinations available in the North region of the cement sector.<\/p>\n\n\n\n Expected Average 2027 EPS Growth Rate 23<\/p>\n\n\n\n Fauji Cement delivered one of the most compelling quarterly results in its recent history during the third quarter of fiscal year 2026. Earnings Per Share grew by 62%<\/strong> year on year, reaching PKR 1.41 for the standalone quarter. Net sales climbed 16%<\/strong> year on year to PKR 22.4 billion, driven primarily by an 18%<\/strong> surge in local dispatches that more than offset the sharp decline in Afghan export volumes following border disruptions. The nine-month cumulative EPS of PKR 4.39 reflects a 15%<\/strong> improvement over the comparable prior-year period. Gross profit margins improved to 36%<\/strong> during the quarter, up 3 percentage points year on year. Two factors drove this improvement: the deliberate exit from low-margin export business and the increased contribution of the company’s renewable energy assets, which reduced dependence on expensive grid power. Finance costs fell by 37%<\/strong> year on year to PKR 1.0 billion, a direct result of the company’s sustained debt reduction programme combined with a more favourable interest rate environment. Other income doubled during the quarter to PKR 692 million, providing additional support to the bottom line.<\/p>\n\n\n\n 131 MW Renewable Energy \u2014 A Structural Margin Shield<\/strong><\/p>\n\n\n\n FCCL<\/a><\/strong> operates one of the largest renewable energy portfolios in Pakistan’s cement industry, comprising 131 MW of combined solar and Waste Heat Recovery capacity. This infrastructure is actively being used to shield margins against rising national grid tariffs, which have affected cost structures across the entire sector. Management continues to leverage these assets as the primary tool for managing energy costs in a volatile tariff environment.<\/p>\n\n\n\n Local Coal Target \u2014 80% to 85% of Fuel Requirements in FY26<\/strong><\/p>\n\n\n\n On the fuel side, the company is on track to raise its usage of local coal to between 80%<\/strong> and 85%<\/strong> of total fuel requirements during fiscal year 2026. This transition significantly de-risks the fuel supply chain from international price volatility and foreign exchange constraints associated with imported coal. Combined with the renewable energy portfolio, this dual-track energy strategy is designed to give management maximum control over the largest cost lines in the business. FCCL<\/strong><\/a> remains engaged in the process of acquiring Attock Cement Company Limited (ACPL<\/a><\/strong>). This acquisition, once finalised, would give the company a critical strategic presence in the South region, a geography it currently lacks \u2014 and direct access to sea-based export markets. For a company currently ranked as Pakistan’s third-largest cement producer by capacity, entering the South would meaningfully diversify revenue streams and reduce the single-region concentration risk that all North-based producers carry. The company’s in-house Polypropylene bags manufacturing plant is generating ongoing savings of approximately PKR 3 to 4 per bag on packaging costs, a recurring operational efficiency that compounds across the volume of bags used annually. On the balance sheet, the company has reduced its Debt-to-Assets ratio to 0.25x as of early 2026, reflecting strong cash flow generation and a disciplined commitment to paying down debt ahead of any new capital allocation decisions.<\/p>\n\n\n\n Expected Average 2027 EPS Growth Rate 24<\/p>\n\n\n\n DGKC <\/a><\/strong>delivered strong third-quarter fiscal 2026 results across every major financial metric. Profit After Tax reached PKR 2,968 million for the quarter, representing a 48.7%<\/strong> year-on-year increase. Earnings Per Share for the standalone quarter stood at PKR 6.77. Net sales grew 15.8%<\/strong> year on year to PKR 20,989 million, supported by a 10% overall increase in total dispatched volumes. While domestic dispatches declined marginally by 2.1%<\/strong>, export dispatches surged by 34%<\/strong> year on year to 602,756 tons, demonstrating the company’s ability to capture international demand and partially offset softer local conditions. Gross profit margins expanded to 29.2%<\/strong> compared to 26.0%<\/strong> in the same quarter of the prior year, a meaningful 3.2 percentage point improvement. Finance costs fell by 56%<\/strong> year on year to PKR 291 million, a result of both an aggressive debt reduction programme and the benefit of a declining interest rate environment. The combination of volume growth, better retention, margin expansion, and sharply lower finance costs produced the significant earnings uplift recorded in the quarter.<\/p>\n\n\n\n Pakistan’s Largest Single Clinker Line \u2014 11,000 Tons Per Day<\/strong><\/p>\n\n\n\n In early 2026, management established a letter of credit for a new clinker production line at the D.G. Khan site that will be the largest single clinker line in Pakistan’s history, with a rated capacity of 11,000 tons per day \u2014 equivalent to approximately 3.5 million tons per annum. The expansion is estimated to cost between PKR 42 billion and PKR 45 billion and is expected to come online within 18 to 20 months. Funding will be structured as 70%<\/strong> debt and 30%<\/strong> internal cash generation, with the company’s current cash and short-term investments of over PKR 29 billion providing a robust foundation for the equity portion.<\/p>\n\n\n\n Market Share Rising from 8% to 12.7% on Completion<\/strong><\/p>\n\n\n\n Once this expansion is commissioned, DGKC<\/strong><\/a>‘s total nationwide capacity will increase from 6.7 million tons to 10.2 million tons. This will lift the company’s capacity-based market share from its current level to 12.7%<\/strong>, representing one of the most significant single-project share gains possible in Pakistan’s cement industry. The expansion firmly positions DGKC<\/strong><\/a> as one of the country’s top-tier producers by volume and reinforces its competitive standing in both the North and South regions where it currently operates. Beyond its core cement operations, DGKC<\/strong><\/a> holds a highly diversified investment portfolio that includes significant stakes in MCB<\/a><\/strong> Bank, Nishat Mills, and Hyundai Nishat. These holdings provide a stable stream of dividends and income contributions that are separate from the cement business cycle. In addition, the company is pursuing plans to acquire a larger stake in Rafhan Maize Products Company Limited as part of a group-level strategy to secure controlling interests in high-value entities across different industries \u2014 further deepening the investment portfolio’s long-term income potential.<\/p>\n\n\n\n Kohat Cement<\/a><\/strong>, Fauji Cement<\/a><\/strong> and D.G. Khan Cement<\/a><\/strong> represent three different paths to value creation within Pakistan\u2019s cement sector. Kohat Cemen<\/a><\/strong>t is focused on unlocking margins through lower energy costs, supported by a strong balance sheet and a captive power project nearing completion. Fauji Cement<\/a><\/strong> is building a more resilient and diversified operation through renewable energy investments, greater reliance on local coal, and a potential acquisition that could expand its geographic footprint and export capabilities. D.G. Khan Cement<\/a><\/strong>, meanwhile, is pursuing scale through a landmark capacity expansion while benefiting from a sizeable investment portfolio that provides additional earnings stability. Despite their different strategies, all three companies share a common objective: reducing costs, strengthening competitive positioning, and preparing for future demand growth. With ongoing infrastructure development, housing requirements, and capacity expansion plans across the industry, these companies are positioning themselves to capture opportunities as the sector evolves over the coming years.<\/p>\n","protected":false},"excerpt":{"rendered":" Introduction Pakistan’s cement sector is beginning to emerge from one of its most challenging periods in recent history. High energy costs, elevated interest rates, weak construction activity, and pressure on export markets weighed heavily on profitability across the industry. However, a handful of producers used this period to strengthen their balance sheets, invest in operational […]<\/p>\n","protected":false},"author":8,"featured_media":13108,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2,1],"tags":[174,186,41,45],"class_list":["post-13104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-psx-blog","category-uncategorized","tag-acpl","tag-dgkc","tag-fccl","tag-kohc"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2026\/06\/Top-5-940-x-788-px-940x445.jpg",940,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2026\/06\/Top-5-940-x-788-px-463x348.jpg",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2026\/06\/Top-5-940-x-788-px-300x251.jpg",300,251,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2026\/06\/Top-5-940-x-788-px.jpg",940,788,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/13104","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\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=13104"}],"version-history":[{"count":2,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/13104\/revisions"}],"predecessor-version":[{"id":13106,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/13104\/revisions\/13106"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/13108"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=13104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=13104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=13104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}3. KOHC – Kohat Cement Company Limited<\/h2>\n\n\n\n
Latest Quarterly Results \u2014 3QFY26<\/h3>\n\n\n\n
Corporate Briefing Highlights \u2014 2026<\/h3>\n\n\n\n
2. FCCL – Fauji Cement Company Limited<\/h2>\n\n\n\n
Latest Quarterly Results \u2014 3QFY26<\/h3>\n\n\n\n
Corporate Briefing Highlights \u2014 2026<\/h3>\n\n\n\n
1. DGKC – D.G. Khan Cement Company Limited<\/h2>\n\n\n\n
Latest Quarterly Results \u2014 3QFY26<\/h3>\n\n\n\n
Corporate Briefing Highlights \u2014 2026<\/h3>\n\n\n\n
Conclusion<\/h2>\n\n\n\n