{"id":9757,"date":"2025-07-12T20:19:16","date_gmt":"2025-07-12T15:19:16","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=9757"},"modified":"2025-07-12T20:19:21","modified_gmt":"2025-07-12T15:19:21","slug":"top-5-high-roe-picks-according-to-topline-securities","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/top-5-high-roe-picks-according-to-topline-securities\/","title":{"rendered":"Top 5 High ROE Picks According to Topline Securities"},"content":{"rendered":"\n

Looking for value in a rising market?<\/strong> As the KSE-100 scales new highs and investor optimism returns, finding cheap stocks gets harder, but not impossible. According to fresh estimates from Topline Securities<\/strong>, several companies still trade at remarkably low valuations based on their expected 2025 earnings.<\/p>\n\n\n\n

In this post, we highlight the five stocks with the highest expected ROE in 2026, judged purely by their forward ROE expectations. They include well-known names offering strong earnings visibility and solid dividends.<\/p>\n\n\n\n

Let\u2019s dive into the most underpriced opportunities hiding in plain sight.<\/p>\n\n\n\n

5. Indus Motor Company Limited (INDU)<\/h2>\n\n\n\n

Expected ROE 2026: 35%<\/strong><\/p>\n\n\n

\n
\"\"<\/figure>\n<\/div>\n\n\n

Indus Motor Company Limited (INDU), the assembler of Toyota vehicles in Pakistan, recently conducted its corporate briefing for investors and analysts. The discussion focused on the company\u2019s financial performance for the first half of FY25, its operational efficiency, localization strategy, and forward outlook. Based on recent estimates, the company also presents a strong value case in terms of profitability, dividends, and valuation multiples.<\/p>\n\n\n\n

Financial Performance in 1HFY25<\/h3>\n\n\n\n

INDU reported a profit after tax (PAT) of PKR 9.96 billion for the first half of FY25, up from PKR 4.96 billion in the same period last year. The increase was primarily driven by a 74% rise in vehicle sales, reaching 12,749 units compared to 7,324 units in the prior year.<\/p>\n\n\n\n

Management attributed the improved gross margins to multiple factors:<\/p>\n\n\n\n

    \n
  • A stable exchange rate<\/li>\n\n\n\n
  • A higher degree of localization<\/li>\n\n\n\n
  • Reduced fixed costs<\/li>\n\n\n\n
  • Improved energy efficiency, with around 25% of total energy needs now met by solar sources<\/li>\n<\/ul>\n\n\n\n

    Localization and Product Plans<\/h3>\n\n\n\n

    The company continues to invest in increasing localization to manage costs and improve margins. Localization levels currently stand at:<\/p>\n\n\n\n

      \n
    • 60%\u201365% for Corolla, Yaris, and Corolla Cross<\/li>\n\n\n\n
    • 40%\u201350% for IMV models such as the Hilux<\/li>\n<\/ul>\n\n\n\n

      Management also confirmed that a hybrid sedan is under consideration, though no decision has been finalized at this point.<\/p>\n\n\n\n

      Industry Challenges and Policy Suggestions<\/h3>\n\n\n\n

      On the policy front, INDU has recommended lifting the PKR 3 million limit on auto financing and rationalizing the tax and duty structure on imported and CKD units. These changes, the company believes, would promote fairer competition within the domestic auto sector.<\/p>\n\n\n\n

      Despite increased competition from new market entrants, INDU stated it has no plans to reduce prices to protect its market share. Instead, the focus remains on maintaining brand strength and product quality.<\/p>\n\n\n\n

      When asked about the possibility of a stock split or buyback, the company responded that no such actions are currently under consideration.<\/p>\n\n\n\n

      Forward-Looking Estimates<\/h3>\n\n\n\n

      Analyst forecasts for FY25 and FY26 reflect continued strength in earnings and shareholder returns:<\/p>\n\n\n\n

        \n
      • EPS Forecast<\/strong>: PKR 307.3 in FY25 and PKR 362.8 in FY26<\/li>\n\n\n\n
      • DPS Forecast<\/strong>: PKR 185 in FY25 and PKR 222 in FY26<\/li>\n\n\n\n
      • Earnings Growth<\/strong>: 60% in FY25 and 18% in FY26<\/li>\n\n\n\n
      • Dividend Yield<\/strong>: Estimated at 9% in FY25 and 11% in FY26<\/li>\n\n\n\n
      • Forward P\/E Ratios<\/strong>: 6.5x for FY25 and 5.5x for FY26<\/li>\n\n\n\n
      • Return on Equity (ROE)<\/strong>: 34% in FY25 and 35% in FY26<\/li>\n\n\n\n
      • Price-to-Book (PBV)<\/strong>: 2.0x in FY25 and 1.8x in FY26<\/li>\n<\/ul>\n\n\n\n

        These metrics suggest that INDU remains one of the more attractively priced companies in the PSX auto sector, especially when accounting for its high payout ratio and consistent profitability.<\/p>\n\n\n\n

        INDU’s strong operational performance in 1HFY25, combined with encouraging earnings forecasts and a focus on cost efficiency, positions the company well for the remainder of the fiscal year. Its valuation multiples remain modest relative to sector norms, and the projected dividend yields make it an appealing option for income-focused investors.<\/p>\n\n\n\n

        With localization, efficiency gains, and policy engagement shaping its near-term trajectory, Indus Motor continues to be a stock worth watching in Pakistan\u2019s automotive space.<\/p>\n\n\n\n\n\n\n\n

        4. Fauji Fertilizer Company Limited (FFC)<\/h2>\n\n\n\n

        Expected ROE 2026: 52%<\/strong><\/p>\n\n\n

        \n
        \"\"<\/figure>\n<\/div>\n\n\n

        Fauji Fertilizer Company Limited (FFC) is among the most established and financially stable companies in the fertilizer sector. With forward estimates pointing to continued earnings growth and attractive shareholder returns, the company remains a key consideration for income-oriented investors.<\/p>\n\n\n\n

        Earnings Outlook<\/h3>\n\n\n\n

        FFC is projected to post earnings per share (EPS) of PKR 55.1<\/strong> in FY25 and PKR 59.2<\/strong> in FY26. These figures imply a steady earnings trajectory, with expected growth of 21% in FY25<\/strong> and 8% in FY26<\/strong>. The outlook reflects both operational stability and consistent demand in the fertilizer sector.<\/p>\n\n\n\n

        Dividend Forecast<\/h3>\n\n\n\n

        The company is expected to maintain its strong dividend policy, with dividend per share (DPS) forecasts of:<\/p>\n\n\n\n

          \n
        • PKR 41.3<\/strong> in FY25<\/li>\n\n\n\n
        • PKR 44.4<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

          This corresponds to forward dividend yields of 10% in FY25<\/strong> and 11% in FY26<\/strong> based on the current market price of PKR 405 \u2014 placing FFC among the higher-yielding stocks on the exchange.<\/p>\n\n\n\n

          Valuation<\/h3>\n\n\n\n

          FFC is trading at relatively low valuation multiples despite its consistent performance. The forward price-to-earnings (P\/E) ratios are estimated at:<\/p>\n\n\n\n

            \n
          • 7.4x<\/strong> for FY25<\/li>\n\n\n\n
          • 6.8x<\/strong> for FY26<\/li>\n<\/ul>\n\n\n\n

            Similarly, the price-to-book (PBV) ratios are projected at 3.8x<\/strong> in FY25 and 3.3x<\/strong> in FY26 \u2014 reflecting moderate valuations relative to profitability.<\/p>\n\n\n\n

            Return on Equity<\/h3>\n\n\n\n

            Return on equity (ROE) is forecast at 55% for FY25<\/strong> and 52% for FY26<\/strong>, indicating continued efficiency in capital allocation and profitability despite sectoral challenges.<\/p>\n\n\n\n

            Conclusion<\/h3>\n\n\n\n

            FFC offers a combination of predictable earnings, generous dividends, and moderate valuations. The forward estimates support a case for long-term value, particularly for investors seeking stability and income. With strong forecasted ROEs and a consistent payout profile, the company remains well-positioned heading into FY25 and FY26.<\/p>\n\n\n\n\n\n\n\n

            3. Engro Fertilizers Limited (EFERT)<\/h2>\n\n\n\n

            Expected ROE 2026: 70%<\/strong><\/p>\n\n\n

            \n
            \"\"<\/figure>\n<\/div>\n\n\n

            Engro Fertilizers Limited (EFERT), one of the leading players in Pakistan\u2019s fertilizer industry, continues to offer a steady earnings outlook with strong dividend potential. Although growth expectations are modest, the company\u2019s generous payout and consistent return profile make it a stable choice for income-focused investors.<\/p>\n\n\n\n

            Earnings Outlook<\/h3>\n\n\n\n

            EFERT is expected to report an earnings per share (EPS) of PKR 20.0<\/strong> in FY25 and PKR 26.1<\/strong> in FY26. While earnings are projected to decline slightly in FY25 (-5%<\/strong>), a recovery is expected in FY26, with EPS growing 31%<\/strong> year-on-year.<\/p>\n\n\n\n

            This pattern reflects a stable underlying business, with potential for upside depending on urea pricing, gas availability, and input cost management.<\/p>\n\n\n\n

            Dividend Forecast<\/h3>\n\n\n\n

            Dividend forecasts remain strong, with projected payouts of:<\/p>\n\n\n\n

              \n
            • PKR 20.0<\/strong> in FY25<\/li>\n\n\n\n
            • PKR 26.1<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

              These translate into attractive dividend yields of 10%<\/strong> and 14%<\/strong> respectively, based on the current market price of PKR 192. EFERT\u2019s yield remains one of the highest among listed companies, reinforcing its appeal for yield-seeking investors.<\/p>\n\n\n\n

              Valuation<\/h3>\n\n\n\n

              EFERT trades at forward price-to-earnings (P\/E) ratios of:<\/p>\n\n\n\n

                \n
              • 9.6x<\/strong> in FY25<\/li>\n\n\n\n
              • 7.4x<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

                While not the cheapest in the sector, these valuations are reasonable given the consistency of cash flows and the relatively high payout.<\/p>\n\n\n\n

                Price-to-book (PBV) is projected at 5.3x<\/strong> in FY25 and 5.1x<\/strong> in FY26 \u2014 slightly elevated, but in line with the company\u2019s profitability and capital return profile.<\/p>\n\n\n\n

                Return on Equity<\/h3>\n\n\n\n

                Return on equity (ROE) remains strong and is forecast at:<\/p>\n\n\n\n

                  \n
                • 55% in FY25<\/strong><\/li>\n\n\n\n
                • 70% in FY26<\/strong><\/li>\n<\/ul>\n\n\n\n

                  These levels indicate healthy capital efficiency and support the current valuation, even in a relatively mature industry environment.<\/p>\n\n\n\n

                  Conclusion<\/h3>\n\n\n\n

                  EFERT may not offer rapid earnings growth, but its high dividend payout and solid return profile make it an appealing option for conservative investors. With dividend yields forecast in the double digits and an expected earnings rebound in FY26, EFERT remains a steady performer in the fertilizer space.<\/p>\n\n\n\n\n\n\n\n

                  2. Sazgar Engineering Works Limited (SAZEW)<\/h2>\n\n\n\n

                  Expected ROE 2026: 80%<\/strong><\/p>\n\n\n

                  \n
                  \"\"<\/figure>\n<\/div>\n\n\n

                  Sazgar Engineering Works Limited (SAZEW) has emerged as one of the most dynamic players in Pakistan\u2019s auto and vehicle manufacturing segment. The company is entering a high-growth phase, with strong earnings forecasts and improving margins driven by its three-wheeler business and growing footprint in four-wheel vehicles.<\/p>\n\n\n\n

                  Earnings Outlook<\/h3>\n\n\n\n

                  SAZEW\u2019s forward earnings outlook is one of the most aggressive in the listed space. EPS is projected at PKR 297.2<\/strong> in FY25 and PKR 302.4<\/strong> in FY26. This comes on the back of very strong growth, with earnings expected to rise by 126% in FY25<\/strong>, followed by a period of stability in FY26.<\/p>\n\n\n\n

                  The company\u2019s expansion into new product lines and improved production volumes are expected to underpin this growth momentum.<\/p>\n\n\n\n

                  Dividend Forecast<\/h3>\n\n\n\n

                  Dividend per share (DPS) is expected to increase significantly as well:<\/p>\n\n\n\n

                    \n
                  • PKR 53.2<\/strong> in FY25<\/li>\n\n\n\n
                  • PKR 54.2<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

                    At the current market price of PKR 1 (due to a technical adjustment or unadjusted face value), this implies forward dividend yields of 4%<\/strong> in both years \u2014 though the actual effective yield will depend on updated pricing post any corporate actions.<\/p>\n\n\n\n

                    Valuation<\/h3>\n\n\n\n

                    SAZEW trades at extremely low forward price-to-earnings (P\/E) ratios, based on these estimates:<\/p>\n\n\n\n

                      \n
                    • 4.1x<\/strong> in FY25<\/li>\n\n\n\n
                    • 4.0x<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

                      These are among the lowest across listed manufacturing firms, signaling significant value \u2014 especially if the projected growth materializes.<\/p>\n\n\n\n

                      The price-to-book (PBV) ratio is also expected to compress from 4.8x in FY25<\/strong> to 2.4x in FY26<\/strong>, reflecting rapid accumulation of retained earnings and strengthening of the balance sheet.<\/p>\n\n\n\n

                      Return on Equity<\/h3>\n\n\n\n

                      SAZEW\u2019s return on equity is forecast at:<\/p>\n\n\n\n

                        \n
                      • 141% in FY25<\/strong><\/li>\n\n\n\n
                      • 80% in FY26<\/strong><\/li>\n<\/ul>\n\n\n\n

                        These numbers highlight extremely high capital efficiency, likely supported by low equity base and high margins \u2014 although they may normalize as the company scales up further.<\/p>\n\n\n\n

                        Conclusion<\/h3>\n\n\n\n

                        SAZEW\u2019s forward projections present a compelling story of high growth and value. The combination of rapid earnings expansion, moderate payout, and low valuation multiples positions it as a high-beta opportunity for investors seeking exposure to Pakistan\u2019s evolving auto sector. While the projections are aggressive, they reflect the company\u2019s expanding market presence and operational leverage.<\/p>\n\n\n\n\n\n\n\n

                        1. Millat Tractors Limited (MTL)<\/h2>\n\n\n\n

                        Expected ROE 2026: 89%<\/strong><\/p>\n\n\n

                        \n
                        \"\"<\/figure>\n<\/div>\n\n\n

                        Millat Tractors Limited (MTL), one of Pakistan\u2019s leading agricultural equipment manufacturers, is navigating a volatile earnings cycle. While the near-term outlook suggests a dip in earnings, forward projections point to a meaningful rebound by FY26. Investors may find value in the long-term recovery trajectory and improved shareholder returns.<\/p>\n\n\n\n

                        Earnings Outlook<\/h3>\n\n\n\n

                        MTL is expected to report an earnings per share (EPS) of PKR 30.8<\/strong> in FY25, followed by a recovery to PKR 51.0<\/strong> in FY26. This reflects a challenging FY25, with earnings projected to decline 38%<\/strong> year-on-year, but a sharp rebound of 66%<\/strong> anticipated in FY26.<\/p>\n\n\n\n

                        The FY25 dip likely reflects sector-wide headwinds such as high interest rates, suppressed rural demand, and elevated input costs \u2014 while the FY26 recovery assumes a normalization in demand and cost structures.<\/p>\n\n\n\n

                        Dividend Forecast<\/h3>\n\n\n\n

                        Dividend per share (DPS) is expected to follow a similar pattern:<\/p>\n\n\n\n

                          \n
                        • PKR 26.2<\/strong> in FY25<\/li>\n\n\n\n
                        • PKR 43.3<\/strong> in FY26<\/li>\n<\/ul>\n\n\n\n

                          These translate into forward dividend yields of 5%<\/strong> and 8%<\/strong> respectively, based on the current share price of PKR 558. MTL has a strong dividend-paying history, and this trend is expected to continue, even during earnings volatility.<\/p>\n\n\n\n

                          Valuation<\/h3>\n\n\n\n

                          Valuation multiples reflect the expected earnings cycle:<\/p>\n\n\n\n

                            \n
                          • P\/E of 18.1x<\/strong> for FY25 (during the earnings trough)<\/li>\n\n\n\n
                          • P\/E of 9.9x<\/strong> for FY26 (as earnings recover)<\/li>\n<\/ul>\n\n\n\n

                            This suggests that current pricing is factoring in near-term softness, with potential upside if the recovery materializes.<\/p>\n\n\n\n

                            Price-to-book (PBV) ratios are projected to ease from 10.4x<\/strong> in FY25 to 9.2x<\/strong> in FY26. While these levels are on the higher end, they align with MTL\u2019s historically high return metrics.<\/p>\n\n\n\n

                            Return on Equity<\/h3>\n\n\n\n

                            MTL\u2019s return on equity (ROE) is forecast at:<\/p>\n\n\n\n

                              \n
                            • 60% in FY25<\/strong><\/li>\n\n\n\n
                            • 89% in FY26<\/strong><\/li>\n<\/ul>\n\n\n\n

                              Despite the earnings drop in FY25, ROE remains elevated, reflecting the company\u2019s asset-light structure and efficient capital deployment.<\/p>\n\n\n\n

                              Conclusion<\/h3>\n\n\n\n

                              MTL presents a cyclical recovery story. While FY25 is expected to be a soft year for earnings, the outlook for FY26 is considerably more positive. The stock may appeal to long-term investors willing to look beyond near-term challenges in the agricultural machinery market. With a strong balance sheet, high ROE, and reliable dividends, MTL remains a well-established name in Pakistan\u2019s manufacturing sector.<\/p>\n","protected":false},"excerpt":{"rendered":"

                              Looking for value in a rising market? As the KSE-100 scales new highs and investor optimism returns, finding cheap stocks gets harder,<\/p>\n","protected":false},"author":4,"featured_media":9761,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[27,89,84,148,63],"class_list":["post-9757","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-psx-blog","tag-efert","tag-ffc","tag-indu","tag-mtl","tag-sazew"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-ROE-Stocks-1140x445.jpg",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-ROE-Stocks-463x348.jpg",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-ROE-Stocks-300x188.jpg",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/07\/Top-ROE-Stocks.jpg",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9757","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\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=9757"}],"version-history":[{"count":3,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9757\/revisions"}],"predecessor-version":[{"id":9762,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/9757\/revisions\/9762"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/9761"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=9757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=9757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=9757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}