PACRA Maintains Entity Ratings of Kohat Cement Company Limited

Kohat Cement Company Limited (“KCCL” or “the Company”) ratings underscore its sustained operational resilience, driven by disciplined cost management and efficient plant utilization in a highly competitive cement industry. Amid improving macroeconomic conditions, the cement industry showed resilience, with total dispatches rising 2.3% to 46.9 million tons despite a 2.7% decline in local sales. Exports surged 29.5% to 9.2 million tons, offset weaker domestic demand. Momentum strengthened in 1QFY25–26, as local dispatches grew 17.7% and exports 20.8%, driving overall growth of 18.3% and signaling a recovery in construction activity. In line with industry trends, KCCL reported dispatches of 2.328 million MT in FY25, down from 2.585 million MT in FY24. The first quarter of FY26 saw a recovery, with dispatches rising to 702,887 MT compared to 591,620 MT in 1QFY25, reflecting an increase of ~18.8%. Local dispatches grew by ~12.7% in 1QFY26, supported by the positive trajectory of the domestic market.Net revenues for FY25 stood at ~PKR 37,536 million, slightly lower than ~PKR 38,648 million in FY24, representing a decline of ~2.9%, largely due to a modest reduction in the Company’s market share from 5.6% to 4.96%. Despite the lower revenues, cost optimization measures helped improve the Gross Profit Margin to 39.2% in FY25, up from 29.1% in the previous year. The bottom line benefited from supplementary income from the investment portfolio, resulting in a Net Profit Margin of ~30.8% (FY24: ~23.0%). During 1QFY26, the Company’s gross margins declined slightly due to competitive pricing pressures in both domestic and export cement markets, while net revenues fell by ~2.0% compared to the same period last year. Development work continues at the greenfield expansion site in Khushab, with import of plant and machinery to be finalized upon sustained recovery in domestic demand. During the year, the Company expanded its renewable energy footprint by commissioning a 7.66MW solar power project, increasing total installed solar capacity to 17.66MW, with a target of 20MW. Construction of a 28.5MW coal-fired power plant at the Kohat facility is progressing as planned and is expected to become operational in the next financial year, significantly reducing power costs and reliance on the national grid. The Company maintains a strong financial profile, supported by low leverage and healthy coverage ratios. In October 2024, shareholders approved a buy-back of 12 million shares, completed in April 2025, reducing paid-up capital to 183.86 million shares. Subsequently, a 5:1 stock split was approved and executed in August 2025 to enhance share liquidity and broaden investor participation.
The Company’s ratings are driven by its ability to sustain market share, maintain margins, and optimize capacity utilization amid a competitive pricing environment. A recovery in domestic cement demand, supports volume stability. Macroeconomic stabilization, improving investor sentiment, and a favorable construction outlook are expected to underpin sector performance in FY25–26. However, near-term pricing pressures persist due to excess industry capacity and competitive dynamics. The Company’s focus on operational efficiency and export diversification remains critical to protecting profitability and ratings.

About the Entity
Kohat Cement Company Limited operates as the sixth largest cement manufacturer in the north region with a total clinker capacity of 5.022mln tons p.a. Kohat Cement, listed on PSX, is majorly owned by ANS Capital (Pvt.) Ltd. (60.09%) - the sponsor family-owned company. The overall control of the company vests in an eight-member board of directors (BoD), including the chairman, Mr. Aizaz Mansoor Shiekh, and the Chief Executive Officer, Mr. Nadeem Atta Sheikh.