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Analyst Opinion
DGKC - D. G. Khan Cement Company Ltd.
DGKC 2QFY26 Result Review
Ahsan Muhammad Asif    2/24/2026 12:00:00 AM
D.G. Khan Cement posted a robust growth in profitability of PKR 3.85bn, up 28% YoY during 2QFY26, despite a slight decline in topline revenue. The company posted 1HFY26 EPS of PKR 13.59/sh, which is up 61% YoY from PKR 8.42/sh. The quarterly revenue stood at Rs 22.95 bn, marginally lower than Rs 23.43 bn in 2QFY25, reflecting a ~2% YoY decline. The slight drop in sales suggests either softer dispatch volumes or pricing pressure in the domestic/export market. However, the real strength of the quarter lies in margin expansion. Profitability Increased Gross profit increased significantly to Rs 7.04 bn compared to Rs 5.84 bn in the same quarter last year, registering a ~20% YoY growth. Gross margins improved to approximately 30.7% from around 24.9% last year. This indicates strong cost control, improved retention prices, and likely benefits from lower coal or energy costs. The margin improvement clearly shows operational efficiency gains. Decline in Finance Cost: A major positive driver of earnings this quarter was the sharp decline in finance costs. Finance cost dropped to Rs 505mn from Rs 1.07bn in 2QFY25 — a decline of more than 50% YoY. This reduction reflects lower interest rates and significant debt repayment during the period. The impact of lower finance charges directly boosted bottom-line growth. As a result, PBT rose to Rs 5.88 bn compared to Rs 4.33 bn last year. After taxation, Profit After Tax (PAT) stood at Rs 3.85 bn, up from Rs 3.01 bn, showing a strong ~28% YoY increase. Earnings per share (EPS) for the quarter improved to Rs 8.62 versus Rs 6.56 last year, reflecting solid earnings expansion. Long-Term Borrowing Decline: The balance sheet shows a significant strengthening compared to June 2025. Long-term borrowings declined from Rs 13.43 bn to Rs 6.13 bn, reflecting aggressive deleveraging. This explains the sharp drop in finance costs. Equity Increased & Book Value Increased: Total equity increased from Rs 99.6 bn in June 2025 to Rs 117.0 bn, and Book value increased to Rs 267/sh in December 2025, driven by higher retained earnings. Liquidity improved substantially, with short-term investments rising sharply and cash balances increasing from under Rs 1 bn to over Rs 2.4 bn. The company is now in a much stronger financial position compared to last year.
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