PACRA maintains Entity Ratings of D.G. Khan Cement Company Limited

D.G. Khan Cement Company’s ratings are supported by the Company’s long-standing presence in Pakistan’s cement industry, underpinned by the Nishat Group’s strong financial strength and proven business acumen. The Country’s cement industry remained under pressure during FY25 due to constrained development spending and subdued construction activity, sector dynamics have begun to stabilize thereafter. During FY25, total industry sales volumes increased by 2.1% to 46.2 million tons, supported primarily by a strong recovery in exports, which rose by 30% to 9.2 million tons, despite a decline in domestic dispatches. Industry capacity utilization remained relatively stable at around 55%. Early FY26 indicators reflect strengthening momentum, with industry dispatches rising notably in 1QFY26, driven by a 17.7% increase in domestic sales and 20.8% growth in exports, signaling a gradual recovery in construction activity and improved sector outlook.
Against this backdrop, the Company’s dispatches increased by approx. 9.1% during FY25 (FY25: ~5.3 million MT; FY24: ~4.8 million MT) and continued to gain momentum in 1QFY26, rising by around 28% YoY to 1.4 million tons and for 1HFY26, dispatches were recorded at 2.8 million tons, translating into an approximate 10% market share during the period. The improvement was largely driven by higher export volumes, with the Hub plant operating at 100% capacity utilization during FY25. Increased volumes, improved pricing, and a recovery in exports supported revenue growth, with net revenues reaching PKR 71,892mln in FY25 (FY24: PKR 66,039mln). Profitability also improved on the back of cost-management initiatives, with gross margins increasing to 26% in FY25 from 16% in the preceding year, though remaining below industry averages. In 1QFY26, net sales rose by 29% YoY to PKR 19,808 million, while margins moderated to 21.7%. Net margins were recorded at 12.1% in FY25 and 10.9% in 1QFY26. Higher export volumes also supported an improvement in capacity utilization to approximately 75%, translating into a market share of around 7.9% based on volumetric sales. On the expansion front, the Company has announced plans to install the country’s largest clinker line with a capacity of 11,000 tons per day at its D.G. Khan site, expected to commence operations within two years, which will increase clinker capacity to 10.0 million tpa. Additionally, Nishat Group–linked entities have expressed an intention to acquire up to 75.69% of Rafhan Maize Products Company Limited, including a proposed 32.71% stake by D.G. Khan Cement. While both initiatives are expected to be largely debt-financed and may lead to higher leverage and finance costs, management intends to maintain gearing within prudent levels.
The Company’s association with the Nishat Group, underpinned by the sponsor’s strong business acumen and a proven track record of over three decades, supports the assigned ratings. Strategic investments in group companies that generate supplementary income further strengthen the Company’s overall financial performance. However, continued improvement of the core operational profile remains important.

About the Entity
D. G. Khan Cement Company Limited (“DGKC”) is a publicly listed limited company, incorporated in Pakistan in 1978. The Company is engaged in the production and sale of clinker and cement. DGKC operates an installed cement capacity of approximately 6.72 million tons per annum. As at June 30, 2025, DGKC is majority owned by the Nishat Group, which holds 48.30% of the Company’s shareholding, while the remaining stake is widely held by institutional and public investors. DGKC is governed by a seven-member Board of Directors. The Chairperson, Mrs. Naz Mansha, has over 38 years of board-level experience, and the Chief Executive Officer, Mr. Mian Raza Mansha, has over 30 years of diversified professional experience and has been associated with the Company for more than two decades.