IMS Research has reinstated coverage on Pakistan’s cement industry with an overweight recommendation, citing improving domestic demand, accelerating consolidation, and supportive macroeconomic conditions as drivers of a stronger earnings outlook.
According to the report, domestic cement demand is expected to rise by eight per cent in FY27, supported by lower interest rates, housing-focused fiscal measures, and improving economic activity. The sector’s recovery follows four years of contraction, with dispatches already rising 7.2 per cent YoY to 50.5Mt in FY26.
Despite improving fundamentals, the sector (excluding Lucky Cement) trades at a compelling EV/ton of US$42.1, well below recent transaction multiples and replacement cost estimates of over US$100/tonne. IMS highlights meaningful scope for valuation re-rating as earnings recover and consolidation benefits materialise.
Top Picks Identified:
• Maple Leaf Cement (MLCF): Favored for its acquisition of Pioneer Cement, diversified earnings base, and low-cost production profile.
• DG Khan Cement (DGKC): Offers upside through capacity expansion and embedded value in its investment portfolio.
• Kohat Cement (KOHC): Recognised for operating efficiency and a cash-rich balance sheet that provides strategic flexibility.
Consolidation Reshaping the Industry
Recent acquisitions are reshaping Pakistan’s cement landscape. MLCF’s purchase of PIOC boosts its northern market share by 7.6 per cent, while Fauji Cement’s acquisition of ACPL lifts its national share to 14.2 per cent. Larger platforms are expected to strengthen pricing discipline, enhance cash flow generation, and improve financial flexibility for future expansion and energy optimisation.
By Abdul Rab Siddiqi, Pakistan
