Fauji Cement Company Limited (FCCL) held its corporate briefing today to discuss the financial results for FY25 and the company’s future outlook.

Key highlights of the briefing are as follows:

• FCCL’s local cement volumes increased by 5.5% YoY to 4.8mn tons in FY25, with the company increasing its market share from 12% in FY24 to 13% in FY25.
• Exports grew by 7.7% YoY during the same period, reaching 0.56mn tons. However, the company’s utilization rate in FY25 dropped to 51%, compared to 55% in FY24 owing to higher capacity.
• Looking ahead to FY26, management anticipate at least 4-5% growth in local demand due to economic stability.
• Export growth to Afghanistan, which showed strong momentum in FY25, is expected to continue into FY26, with management projecting a 8-9% increase in exports.
• FCCL’s current cement retention is around PkR 15,000-16,000 per ton, while export price stands at PkR 10,500 per ton.
• FCCL has acquired a polypropylene (PP) bags manufacturing plant in Hattar, KPK, and is currently meeting 90–95% of its demand through in-house production. According to management, in-house production is cheaper than the market by PkR 4 per bag
• During FY25, FCCL sourced 41% of its power from the grid and 59% from in-house generation. The company is actively working to reduce its dependence on the grid by adding 15 MW of solar power, bringing the total installed solar capacity to 67.5 MW, in addition to 48 MW from Waste Heat Recovery (WHR). The current grid electricity rate is approximately PkR 31 per kWh.
• FCCL’s coal mix for FY25 consisted of 25% Afghan coal and 75% local coal, with an increased reliance on local coal compared to 59% in FY24. The company also used alternative fuels, which accounted for 7% of the fuel mix.
• Afghan coal is currently priced at around PkR 38-39k/ton, while local coal is available at PkR 36-37k/ton.
• Furthermore, management has confirmed that there are no plans to convert the loan into equity. Previously, the loan was interest-free; however, it is now subject to an interest rate of 10%.
• According to management, depreciation increased due to the capitalization of the DG plant, while other fixed costs rose due to the impact of inflation.
• Management believes it is unlikely that any further capacity will be added in the next 4–5 years, citing current demand and the existing cement capacity situation.
• According to management, the royalty increased from PkR 250 per ton to PkR 1,232 per ton. However, this matter is currently under litigation, and a favorable decision is expected.
• FCCL is our top pick, and we maintain our Buy stance with a Target Price of PkR 70/sh.

Courtesy – BMA Research