IGI Securities Limited.

Fauji Cement Company Limited (FCCL)

• Fauji Cement Company Limited (FCCL) is scheduled to announce its 1QFY16 financial result on 29th Oct-15. Company’s profitability is estimated to increase by +62%YoY to PKR 975mn (EPS PKR 0.73) in 1QFY16

• Company’s capacity utilization stood at 76% in FY15 and is expected to increase to 81% in FY16. We estimate, FCCL requires 32MW of energy at 81% capacity utilization level, of which roughly 31% would be now provided by its 12MW WHR plant which started commercial operations from 14th May-15.

• The stock is currently trading at FY16E P/E and P/B multiple of 11x and 2.8x, respectively. The scrip has rallied +2% during FY16TD as compared to KSE 100’s -1.4%. With our Jun-16 TP of PKR 49.9/share, scrip offers a return of 40% and we recommend a strong ‘Buy’ call.

Profitability to Jack up by 62%YoY at PKR 0.73/share

Fauji Cement Company Limited (FCCL) is scheduled to announce its 1QFY16 financial result on 29th Oct-15. Company’s profitability is estimated to increase by +62%YoY to PKR 975mn (EPS PKR 0.73) in 1QFY16 owing to a) +8%YoY growth in cement dispatches leading to +5%YoY growth in revenue, b) 3%YoY decline in company’s power cost to PKR 983/ton, following complete operational utilization of 12MW Waste Heat Recovery (WHR) during 1QFY16, and c) 65%YoY drop in financial cost due to deleveraging (in FY15, company’s debt stood at PKR 6.5bn compared to PKR 7.9bn in FY14, a ~18% reduction).

Outlook