D.G. Khan Cement Company Ltd. (DGKC) announced its 3QFY25 financial results, reporting earnings of PkR2.0bn (EPS: PkR4.6), a 69%YoY increase from the NPAT of PkR1.2bn (EPS: PkR2.7) in SPLY. The result exceeds our expectations, primarily due to improved margins driven by higher-than-expected retention prices and lower costs.

• Revenue increased by 27%YoY to PkR18.1bn, compared to PkR14.3bn in SPLY, driven by 30%YoY increase in total offtakes to 1.35mn tons and a 6%YoY rise in local retention prices.
• Gross margins improved to 26.0% from 25.5% in the prior year, supported by increased retention prices and a decline in coal prices, particularly in the North.
• Operating expenses totalled Pkr1.3 billion, up 80% year-over-year (Yoy), primarily due to higher distribution expenses resulting from a 2.6 times year-over-year increase in export offtakes.
• Finance cost dropped by 66%YoY to Pk660mn, owing to a 33%YoY reduction in outstanding debt and a decline in interest rates.
• This takes 9MFY25 earnings accumulated to PkR5.5bn (EPS: PkR12.6), up 2.5x YoY from PkR2.2bn (EPS: PkR5.1) in SPLY.
• We maintain our ‘BUY’ stance on DGKC, driven by the expected improvement in profitability, supported by higher gross margins, increased offtakes, improved utilisation, and easing interest rates. Our December 2025 target price on DGKC is PKR 167/share, providing a potential upside of 41%.

Courtesy – AKD Research