PACRA Maintains Entity Ratings of Cherat Cement Company Limited

The ratings of Cherat Cement Company Limited (“Cherat” or “the Company”) reflect a notable position in the cement industry, with a market share of approximately 7%, primarily concentrated in the northern region of Pakistan. The Company benefits from its strategically located manufacturing facility in Nowshera, facilitating efficient supply to Punjab, Khyber Pakhtunkhwa (KPK), FATA, Azad Jammu & Kashmir, and exports to Afghanistan. The Pakistan cement industry showed recovery in FY25, with total sales rising 2.1% to 46.2 million tons. Local dispatches fell by 1.16 million tons due to declines in the North (2.6%) and South Zones (5.2%). However, exports surged by 30% reaching 9.2 million tons. Industry capacity utilization remained stable at 55%, with domestic sales at 44% and exports at 11%. Despite these challenges, industry demand has strengthened, with overall dispatches rising notably in the first quarter. Domestic sales increased by 17% due to revived private construction activity, improved project execution, and gradually returning consumer confidence. Exports grew by 21%, driven by stronger sea-based shipments and higher dispatches to Afghanistan, though border tensions pose a risk. Growth momentum is expected to continue into FY26 despite ongoing cost pressures. For Cherat Cement, total dispatches during FY25 stood at 2.390 million tons (FY24: 2.627 million tons), reflecting a decline of ~9%. In 1QFY26, the Company’s dispatches were recorded at 0.700 million tons (1QFY25: 0.588 million tons), registering a recovery of ~19%, aligning with the overall industry trend. Revenue for FY25 increased to PKR 37.8 billion from PKR 38.4 billion in FY24, and In 1QFY26, revenues grew by 8.8% annualized, reflecting operational efficiencies and disciplined cost management. Cherat Cement demonstrated strong profitability during FY25, with gross margins improving to 36.9% from 30.8% in FY24, operating margins increasing to 33.1% from 27.5%, and net margins rising significantly to 23.0% from 14.3%. Though margins slightly dipped in 1QFY26, they are expected to rebound with strengthening demand supported by private-sector construction and post-flood rehabilitation efforts. Cherat Cement’s financial leverage improved, with debt-to-equity reducing to 14.3% in September 2025 from 16.5% in FY25 and 18.9% in FY24, due to consistent repayments and no new debt-funded projects. Total debt stood at PKR 5.9 billion in 1QFY26. The Company invests in sustainability through Waste Heat Recovery, solar power, and energy optimization, reducing costs and environmental impact. It also supports social initiatives in education, healthcare, and conservation. As a diversified conglomerate with stable ownership and experienced management, GFG provides strong governance and ensures strategic continuity.
The Company's ratings depend on its ability to maintain market position, sustain business volumes, preserve margins, and optimize production capacity utilization. Upholding current financial performance amidst the challenging economic environment and demand pressures will be crucial for the ratings, going forward.

About the Entity
Cherat Cement, a part of the Ghulam Faruque Group (GFG), commenced operations in 1985. The majority ownership is held by GFG through its associated companies and family members. The Company is governed by an eight-member Board of Directors, including CEO Mr. Azam Faruque, who has been with the Company since 1992 and is the grandson of Ghulam Faruque. GFG’s strategic investments in entities like Mirpurkhas Sugar Mills and Cherat Packaging complement Cherat Cement’s position as a premier cement manufacturer.