Pakistan-based Gharibwal Cement Ltd (GWLC)'s strategic investments aimed at improving efficiency will drive profit growth, according to IMS Research analysts. Profitability is expected to surge by FY25-26, largely due to significant efficiency investments, including the installation of a 24.5MW solar power plant. Furthermore, a recent upgrade to the plant is projected to reduce fuel consumption by 3-4 per cent and increase the use of local coal (approximately 17 per cent cheaper than imported coal) from 20 to 100 per cent.
Attractive valuations also support the anticipated profit growth. The company's stock trades at the lowest EV/t in the sector, at only US$23/t, compared to the sector average of US$37/t. This positions GWLC for strong performance, as efficiency gains are expected to translate into profitability in the forthcoming quarters.
According to IMS Research, GWLC's investments in the solar power plant and the upgrade of its 2.4Mta existing cement line in Ismailwal, District Chakwal, are expected to align its operational efficiency with that of the most efficient cement producers in the country. Once fully operational, the solar plant is projected to generate annual post-tax savings of PKR761m (US$0.26m) (approximately PKR1.90 (US$0.007)/kWh).
In a related development, the upgrade, completed in March, involved replacing existing coolers with advanced models from FLSmidth. This is expected to enable 100 per cent utilisation of local coal and reduce coal consumption by 3-4 per cent. It is worth noting that GWLC maintains a strong balance sheet, with a net cash position of PKR1.76bn (US$5.91m) as of 3QFY24-25. This, combined with the company's strategic initiatives, positions GWLC favourably for future growth.
by Abdul Rab Sidiqqi, Pakistan
