Lucky Cement Ltd. (LUCK) has announced the successful completion and commissioning of a Process Optimization and Capacity Enhancement Project at its Karachi Plant. The aforesaid project has lifted the Karachi plant’s annual cement production capacity by ~0.3mn tons to 5.35mn tons per annum (from 5.05mn tons), taking the Company’s total domestic capacity to 15.6mn tons and reinforcing its position as Pakistan’s largest cement manufacturer.

Beyond the capacity uplift, the said project is expected to improve thermal efficiency and reduce specific fuel consumption. The incremental capacity would enhance the company’s offtakes, with the South Plant capacity utilization at 101% in 9MFY26. We expect the incremental capacity to have an annual EPS impact of PkR0.52 and a positive valuation impact of PkR4.3/sh.

Outlook: We increase our Dec’26 target price to PkR735/sh from PkR731/sh previously, on incorporation of aforesaid capacity enhancement. We maintain our ‘BUY’ stance on the stock underpinned by i) improvement in core margins, ii) increase in dividend from the power segment, and iii) expected recovery in cyclical segments benefiting its subsidiaries.

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Courtesy – AKD Research