Introduction
While larger players, such as Lucky Cement, Fauji Cement, Bestway, and Maple Leaf, dominate Pakistan's cement industry, Thatta Cement Company Ltd has quietly staged an impressive turnaround. With smart capital expenditure (CAPEX), renewable energy adoption, and strategic diversification into power and machinery, Thatta Cement is signaling long-term ambition. Here's an in-depth look at their growth story, financial metrics, and future outlook based on their latest filings and Pakistan’s macroeconomic context.
Financial Turnaround: A Breakout Year
Thatta Cement posted a stellar FY2023–24, with net sales increasing by 39% to Rs 7.52 billion (compared to Rs 5.41 billion in FY2022–23). Most impressive: profit after tax surged from Rs 249 million to Rs 1.5 billion, pushing EPS from Rs 2.72 to Rs 16.40.
The company’s gross margins rose to 28.85%, up from a mere 7.77% a year earlier, driven by increased local dispatches and steeply reduced energy costs.
In 9M FY2024–25, the upward trajectory continued: PAT reached Rs 1.46 billion (EPS Rs 17.95), compared to Rs 734 million (EPS Rs 9.35) during the same period last year.
Source: Annual Report 2023–2024, Half-Yearly Report 2024–2025, Third Quarter Report 2024–2025
CAPEX and Diversification: Investments for the Future
Thatta Cement has ramped up capital expenditures significantly—Rs 1.34 billion in 9M FY25 alone. These funds are being deployed into:
A 5 MW solar power plant (operational)
A 4.8 MW wind energy facility (commissioned April 2025)
A 150 TPH clinker pre-crusher, aimed at reducing grinding energy
Moreover, they expanded their stake in Thatta Power (Pvt) Ltd from 62.4% to 88.5%, giving them greater control over captive power.
In a bold diversification move, Thatta also launched a new subsidiary: Minsk Work Tractors (Pvt) Ltd, to assemble Belarusian tractors. While its contribution to earnings may be marginal in the short term, it diversifies Thatta’s revenue streams beyond cement.
Source: Half-Yearly Report 2024–2025, Third Quarter Report 2024–2025
Market Share and Competition
With a production capacity of ~693,000 tons per annum (just ~2% of national capacity), Thatta Cement is a small fish in a big pond. Major players like Lucky, Bestway, and Fauji Cement each command 10–17% market share.
However, Thatta’s competitive edge lies in its export strategy. The company ships to Africa, the Middle East, India, and Sri Lanka, and government support via tax relief for exporters in the 2025–26 budget could enhance this channel.
Source: Company Website, Federal Budget 2025 Highlights
Sustainability & Cost Control: Renewable Energy Impact
The integration of 9.8 MW of renewable energy (solar + wind) now covers ~20–25% of Thatta’s electricity needs. This transition has significantly reduced fuel and power costs. For example, in 1H FY25, cost of sales rose only 7.5% despite a 23% rise in sales.
Thatta’s cost-to-sales ratio has dropped nearly 10 percentage points YoY, contributing directly to margin expansion and EPS growth.
Estimated Savings: PKR 50–100 million annually in fuel/power.
Source: Third Quarter Report 2024–2025
Valuation & Outlook: A Hidden Gem?
At a trailing P/E of ~7x (as of June 2025), Thatta Cement trades at a discount to peers like Fauji Cement (~11x) and Bestway (~11.5x). With EPS nearing Rs 18–19, further efficiencies or earnings from tractors/power could re-rate the stock.
Despite its smaller scale, Thatta is executing smart moves with discipline. If cement demand revives and exports increase, this could be one of the more exciting medium-to-long-term cement stories in Pakistan.
Conclusion
Thatta Cement may be small in size, but its strategic CAPEX, focus on exports, renewable energy adoption, and diversification into agriculture machinery place it in a strong position. For medium-to-long-term investors, this underdog could offer solid upside with controlled downside.
When it'll touch 500 per share
ReplyDeleteWell, I believe no one can say for certain, but my long-term targets are 270 and 350. I hope it reaches around those levels by the end of next year, provided the fundamentals and macroeconomic factors remain intact and continue to improve over time.
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