Karachi, January 27, 2022 (PPI-OT): Pakistan Cement: PAT to increase on YoY basis, despite cost pressure

AKD Cement Universe is expected to post a PAT of PkR7.2bn for 2QFY22 against PAT of PkR6.2bn for 2QFY21 however on sequential basis, a decline is expected as coal prices take a toll on margins and profitability of players.

The theme for all players in our universe remains the same where gross margins for 2QFY22 are expected to dip however increase in topline compensates for declining margins to a large extent.

Moving forward, the sequential decline is expected to continue into 3QFY22 as coal prices continue to increase, currently trading at USD188/ton however a further cement price increase from Feb’22 can mitigate the impact of increasing cost.

Volatility in coal prices is keeping cement sector volatile as well however the aforesaid volatility can provide good opportunity to accumulate where we maintain our overweight stance on the sector for CY22 and in this backdrop, we highlight LUCK, MLCF and FCCL as our top picks from sector.