D.G. Khan Cement Company Limited (DGKC) is scheduled to announce its 2QFY22 financial result on 18TH Feb’22 whereby we project a bottom-line of PKR 616mn (EPS: PKR 1.41) vis-à-vis PKR 1,152mn (EPS: PKR 2.63) in SPLY.

Topline of the company is expected to grow by 11% YoY during the quarter amid over 40% higher retention prices, which should offset the impact of a 15% decline in offtake to 1,580k tons. Albeit, with rising coal prices, depreciation in the Pak Rupee and higher electricity tariff coming into play, margins are set to compress to 16% in 2QFY22 against 21% in SPLY.

On a QoQ basis too margins appear weak (1QFY22: 19%) due to aforementioned reasons. This will take the 1HFY22 profitability to PKR 1,524mn (EPS: PKR 3.48) compared to PKR 801mn (EPS: PKR 1.83) in 1HFY21 led by higher margins of 17.3% vs. 15.6% owed to higher prices and inventory gains. Moreover, a 3x jump in other income to PKR 1.2bn, attributable to lack of dividend payout by banks in 1Q last year due to State Bank requirement, should also cushion earnings.

Courtesy – AHL Research