Pakistan’s total cement sales for October 2023 are expected to witness a decline of 11% YoY, reaching an estimated 3.80 million tons. While, on a cumulative basis, total sales is anticipated to increase by 13% YoY in 4MFY24 to 15.65 million tons. The growth is driven by the expected recovery in local demand following by low base effect due to floods and a pickup in exports.
Lower coal prices than last year along with a gradual increase in cement prices is expected to increase margins going forward and we remain overweight on the sector due to its solid cash generation and cheap valuations. Cement companies are trading significantly below replacement value and we expect valuations to revert to the mean once economic uncertainty reduces. Cement sector returns in the past have majorly been led by sector pricing discipline rather than cement dispatches.
We indicate a promising outlook for the cement industry due to potential economic recovery and political stability. We believe that cement export from the south zone could show significant growth in FY24 as lower coal prices have made companies competitive again.
Company wise expected Cement Dispatches
Important Disclosures
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