Pakistan Banks: Hanging sword of higher taxation – By Insight Research

Dec 13 2024


Insight Securities


  • Domestic banks have enjoyed healthy profits over the past two years, supported by record-high interest rates and resilient asset quality, which helped them navigate macroeconomic challenges. However, the faster than expected decline in inflation and subsequent reduction in the policy rate has put pressure on the sector's NIMs. A more pressing issue is the ADR tax, which has become a point of contention for banks and regulators alike. Banks have challenged the tax in courts, securing stay orders as it is levied on their balance sheets. Additionally, they have adopted strategies to artificially boost their ADR ratios, such as shedding high cost deposits and offering loans at below market rate, creating distortions without achieving the intended goal of promoting private sector lending. The recent surge in advances, especially post Sep’24, highlights this trend. While part of the increase could be attributed to lower interest rates and some degree of stability on economic front, a significant portion stems from efforts to meet year end ADR targets. This is further evident by declining deposits during the same period. Such flawed taxation methods fail to generate meaningful revenue for the government or encourage purposeful private sector lending.
  • The formation of a committee led by the current Deputy Prime Minister and Foreign Minister, Ishaq Dar, underscores the critical importance of this issue. The committee's mandate includes reviewing the legal framework governing fiscal measures related to the banking sector's ADR, exploring alternative taxation schemes for bank profits derived from government securities, and collaborating with the banking sector and FBR to develop consensus-driven solutions.

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Commercial Bank: 1QCY25 Universe earnings to grow 13%QoQ - By Taurus Research

Apr 18 2025


Taurus Securities


  • We expect 1QCY25 TSL Banking Universe earnings to grow 13% QoQ on account of lower cost of funds and provisions. Wherein, UBL and BAFL have already announced their results posting 39% QoQ growth and 52%QoQ growth in profitability, respectively. On an annualized basis, we anticipate earnings to go up 5%.
  • During the period, the State Bank of Pakistan cut its policy rate by 100bps to 12%. Resultantly, the industry spread on outstanding loans and deposits is estimated to have averaged ~6.50% as compared an average of 5.39% in the previous quarter—on the back of the re-pricing lag between the assets and the liability side.
  • Nevertheless, we anticipate a cumulative re-pricing of ~900bps in asset yields to have taken place by the period when compared to the corresponding period last year. Hence, affecting the interest incomes, specially on the investment books.
Pakistan Fertilizer: 1QCY25E Result Preview: Muted offtakes to weigh on profitability - By AKD Research

Apr 18 2025


AKD Securities


  • AKD Fertilizer Universe’s profitability is projected to decline by 16%YoY in 1QCY25E, primarily due to lower offtakes.
  • Company-wise, FFC profitability is expected to rise by 46%YoY post-merger, while EFERT and FATIMA earnings are projected to decline by 65%/6%, respectively.
  • FFC payout is expected to increase by 63%YoY, while EFERT dividend is projected to fall by 75%YoY
Economy: Pakistan’s Trade Deficit Narrowed in March’25 - By Sherman Research

Apr 18 2025


Sherman Securities


  • A detailed breakdown of trade numbers released by the Pakistan Bureau of Statistics (PBS) shows that, on a monthly basis, imports remained flat at US$4.8bn during Mar’25. This stability was primarily driven by lower imports in the petroleum and food sectors on a weighted average basis, while agriculture imports increased.
  • On cumulative basis, import bill was recorded at US$42.7bn (up 9%YoY) during 9MFY25 mainly due to higher imports of machinery, textile and agriculture, while petroleum and food imports declined.
  • Exports increased to US$2.6bn (up 6%MoM) during Mar’24. Likewise, during 9MFY25, exports clocked in at US$24.7bn (up 8%YoY), mainly due to growth in exports in the food and textile sectors.
Pakistan Economy: Power sector circular debt resolution plan in the offing - By Foundation Research

Apr 18 2025


Foundation Securities


  • Pakistan's power sector has become a key challenge in the country's macroeconomic balancing act. Stabilizing the economy hinges on resolving power sector issues, which took center stage in recent IMF negotiations for the $7 billion Extended Fund Facility. In a bid to settle the amount in a single go, the government has plans to inject Rs1.5 trillion to tackle the circular debt crisis, clearing overdue liabilities and paving the way for sector stability.
  • Commercial banks will provide nearly Rs1.275 trillion of the bailout package, despite already having significant exposure to the power sector's circular debt. The deal, negotiated between the government and banks, offers below-KIBOR interest rates, potentially saving the government 3-5% on debt servicing costs. Contrary to news flow of banks being pressured into the deal, top banking executives and government officials have assured that the agreement was reached mutually.
  • According to news flow, a term sheet was signed between the government and banks at a large commercial bank in Karachi, with disbursements slated to begin next month. This financial intervention aims to curb the energy crisis and prevent further debt accumulation.
Economy: Mar-2025: Current Account posts historic surplus - By JS Research

Apr 18 2025


JS Global Capital


  • Pakistan's current account balance posted a massive surplus of US$1.19bn in Mar-2025, bringing the 9MFY25 current account surplus to US$1.86bn. The improvement was driven by record-high remittances, with Mar-2025 inflows reaching US$4.1bn, a 37% YoY surge.
  • Balance of Payments (BoP) remained negative this month as well due to loan repayments. Monthly BoP figure has turned negative for the fifth time FY25TD. However, BoP balance remains in positive territory for 9MFY25.
  • We highlight that some planned foreign inflows have not materialized, likely to be unlocked post IMF disbursement. SBP governor recently revised the Jun-2025 reserves forecast to US$14bn, up from previous estimate of US$13bn. To note, SBP’s reserves have declined by ~US$1.1bn since Dec-24 while Import cover is down from 2.8months to 2.1months.
Pakistan Textile: Mar’25 Textile exports up 10%YoY - By Taurus Research

Apr 18 2025


Taurus Securities


  • Textile exports arrived at USD 1.43Bn in Mar’25 as compared to USD 1.3Bn in the SPLY, reflecting a growth of ~10%YoY. Whereas, on a monthly basis it only increased by 1%MoM. The increase was mainly due to the higher exports of cotton yarn, knitwear, bed wear, ready-made garments, art & silk, made-up articles and other textiles up 30%YoY, 15%YoY, 19%YoY, 12%YoY, 9%YoY, 10%YoY and 11%YoY, respectively. Moreover, 9MFY25 textile exports increased 9%YoY to USD 13.6Bn as compared to USD 12Bn in the SPLY
  • In Mar’25, Basic textile exports totaled USD 205Mn, down ~2% YoY, mainly attributed to decline in exports of cotton cloth and yarn. Whereas, value added exports showed a significant increase of 13%YoY along with a 9%YoY increase in other textiles.
Morning News: March C/A posts $1.2bn surplus - By Vector Research

Apr 18 2025


Vector Securities


  • Pakistan’s current account posted a record all-time high monthly surplus of $1.2 billion in March 2025, fueled by historic inflows of home remittances, according to data released by the State Bank of Pakistan (SBP) on Thursday.
  • Foreign Direct Investment (FDI) into Pakistan rose by 14 percent during the first nine months of this fiscal year (FY25). According to the State Bank of Pakistan (SBP), the country fetched FDI amounting to $1.644 billion in July-March of FY25 compared to $1.442 billion in the same period of last fiscal year (FY24), showing an increase of $202 million. During the period under review, FDI inflows were $2.472 billion as against $828 million outflow.
  • Pakistan’s central bank’s foreign exchange reserves dropped by $127 million to $10.57 billion during the week ended April 11 due to external debt repayments, the State Bank of Pakistan (SBP) said on Thursday. The total liquid foreign reserves held by the country also decreased by $91 million to $15.66 billion. However, the reserves of commercial banks increased by $36 million to $5.09 billion.
Technical Outlook: KSE-100; Consolidation to continue - By JS Research

Apr 18 2025


JS Global Capital


  • The KSE-100 index witnessed positive movement to close at 116,901, up 881 points DoD. Volumes stood low at 408mn shares compared to 482mn shares traded in the previous session. The index is currently trading above the 30-DMA and the 50-DMA that will restrict downside at 115,828 and 114,617 levels, respectively. However, any upside will face resistance in the range of 117,210-118,050 levels where a break above targeting 118,718 level. The RSI and the Stochastic Oscillator have moved up, supporting a positive view. We recommend investors to ‘Buy on dips’, keeping stoploss below the 30-DMA. The support and resistance levels are at 116,074 and 117,472 levels, respectively.
Morning News: March C/A posts $1.2bn surplus - By WE Research

Apr 18 2025



  • Pakistan recorded a historic monthly current account surplus of $1.2 billion in March 2025, driven by unprecedented remittance inflows of $4.1 billion, according to the State Bank of Pakistan. This marked a 229% increase from March 2024 and a significant reversal from February 2025’s deficit. Cumulatively, the current account showed a $1.859 billion surplus in July–March FY25, compared to a $1.652 billion deficit in the same period last year. Analysts hailed this as a vital boost for the economy, easing pressure on the rupee, supporting foreign reserves, and reducing reliance on external borrowing. While the trade deficit widened to $18.73 billion due to increased imports, moderate export growth and a $2.32 billion services deficit highlighted ongoing challenges. Despite persistent financial pressures and IMF support under a $7 billion program, Pakistan’s external sector is showing signs of recovery backed by policy reforms and improved macroeconomic stability.
  • Foreign Direct Investment (FDI) in Pakistan rose by 14% in the first nine months of FY25, reaching $1.644 billion compared to $1.442 billion during the same period in FY24, primarily due to strong inflows from China and Hong Kong and increased investment in the financial services and power sectors. China contributed the largest share at 41%, with its FDI doubling to $684.5 million. Despite this overall growth, March 2025 saw a sharp month-on-month decline of 91% in FDI. Economists attribute the positive trend to improved macroeconomic stability and IMF-backed reforms, but warn that sustained growth depends on consistent policies and political stability to maintain investor confidence.
  • Pakistan’s textile exports grew by 9.38% during July–March FY25, reaching $13.613 billion compared to $12.445 billion in the same period last year, according to the Pakistan Bureau of Statistics (PBS). Overall exports rose by 7.82% to $24.719 billion, with March 2025 exports totaling $2.646 billion—up 6.27% from February and 3.08% year-on-year. Textile exports in March specifically increased by 9.97% from February. However, rice exports declined by 5.91%, totaling $2.757 billion compared to $2.930 billion last year. Key export commodities in March included knitwear, readymade garments, bedwear, various rice types, cotton cloth, towels, and petroleum products, highlighting continued strength in the textile sector despite weaknesses in agricultural exports.
Lotte Chemical Pakistan Limited (LOTCHEM): 1QCY25 EPS clocked in at PKR0.44 – Below expectation - By Insight Research

Apr 17 2025


Insight Securities


  • LOTCHEM has announced its 1QCY25 result, wherein company has posted PAT of PKR0.7bn (EPS: PKR0.44) vs. PAT of PKR0.9bn (EPS: PKR0.59) in SPLY. The result is below our expectation due to lower than estimated revenue.
  • In 1QCY25, revenue decreased by 33% YoY, due to lower volumetric sales. While on QoQ basis, same is up by 6% possibly due to higher PTA prices and volumetric sales.
  • Gross margins of the company clocked in at 6.2%, up by 100bps/540bps YoY/QoQ, due to improved core delta.
Lotte Chemical Pakistan Limited (LOTCHEM): 1QCY25 EPS clocked in at PKR0.44 – Below expectation - By Insight Research

Apr 17 2025


Insight Securities


  • LOTCHEM has announced its 1QCY25 result, wherein company has posted PAT of PKR0.7bn (EPS: PKR0.44) vs. PAT of PKR0.9bn (EPS: PKR0.59) in SPLY. The result is below our expectation due to lower than estimated revenue.
  • In 1QCY25, revenue decreased by 33% YoY, due to lower volumetric sales. While on QoQ basis, same is up by 6% possibly due to higher PTA prices and volumetric sales.
  • Gross margins of the company clocked in at 6.2%, up by 100bps/540bps YoY/QoQ, due to improved core delta.
Lotte Chemical Pakistan Limited (LOTCHEM): 1QCY25 Preview: Profitability to stay muted - By Insight Research

Apr 16 2025


Insight Securities


  • LOTCHEM is expected to post a PAT of PKR806mn (EPS: PKR0.50) in 1QCY25 vs. loss of PKR19mn (LPS: PKR0.01) in preceding quarter amid better core delta. While on YoY basis profitability inch up by ~2%. To note, International PTA prices plunged by ~13% YoY to clock in at ~US$682/ton. Similarly, PX prices witnessed a decrease of ~16% YoY to clock in at US$868/ ton, resulting in an increase of ~9% in PTA-PX spread. Company’s topline is expected to decrease by 25% YoY to clock in at PKR24.3bn in 1QCY25, amid lower volumetric sales. Whereas, same is expected to increase by ~20% QoQ due to higher volumetric sales. Gross margins of the company are estimated to clock in at 6.5% in 1QCY25, witnessing an increase of ~130bps/5.7ppts YoY/QoQ on account of improved core delta. Selling and distribution expense is expected to increase by 39%/20%, YoY/QoQ.
  • EPCL is expected to post a consolidated LAT of PKR264mn (LPS: PKR0.29) in 1QCY25 vs. LAT of PKR900mn (LPS: PKR0.99) in SPLY. Company’s topline is expected to increase by 12% YoY to clock in at PKR18.5bn in 1QCY25, amid higher volumetric sales. While, same is expected to decline by ~13% QoQ primarily due to lower PVC prices. Gross margins are estimated to clock in at 10.2% in 1QCY25 witnessing an increase of ~380bps YoY, attributable to higher volumetric sales. While on QoQ basis, same is expected to decline by ~390bps amid lower core delta and higher gas prices. To note, International PVC prices decline by ~4%/5% YoY/QoQ to clock in at ~US$756/ton. Similarly, PVCEthylene margins witnessed a decline of ~5%/10% YoY/QoQ. Selling and distribution expense is expected to decrease by 32% YoY, whereas same is expected to go down by ~8% QoQ. Financial charges are anticipated to decrease by 22%/27% YoY/ QoQ to clock in at PKR1.3bn, primarily due to decline in debt level and interest rates.
Pakistan Cement: 3QFY25 Previews: Profitability to increase by 36% YoY - By Insight Research

Apr 16 2025


Insight Securities


  • We expect ISL cement universe to post a PAT of ~PKR10.6bn in 3QFY25 increasing by 36% YoY amid higher offtakes and lower finance cost. While on QoQ, profitability is expected to decline by 21%, mainly due to decline in offtakes and lower retention price for north based players. Revenue is anticipated to increase by 7% YoY due to higher volumetric sales and retention price. While on QoQ, same is expected to decline by 16% due to lower retention price and volumetric sales. Gross margins are expected to clock in at 30% in 3QFY25 vs. 28% in 3QFY24 and 34% in 2QFY25. Finance cost is expected to decline by 46% YoY on account of decline in interest rates and debt levels. To note, in previous quarter cement companies took advantage of cheaper loans amid ADR pressure on banking sector. However, we have assumed normalization of short term borrowing this quarter resulting in decline in other income (↓20%) and finance cost (↓43%). On company specific basis, we expect LUCK/DGKC/MLCF/FCCL/PIOC/ACPL to post EPS of PKR22.1/3.6/2.2/1.1/ 5.8 /4.0 in 3QFY25, respectively.
  • During the quarter, local cement dispatches increased by 2% YoY, while on QoQ same is down by 6% due to winter and Ramadan effect. Similarly, cement exports surged by 19% YoY to clock in at 1.7mn tons. To note, capacity utilization of the sector clocked in at 52% in 3QFY25 vs 50% in SPLY.
United Bank (UBL): 1QCY25 EPS clocked in at PKR28.8 – Above expectation - By Insight Research

Apr 16 2025


Insight Securities


  • UBL has announced its 1QCY25 result, wherein it has posted consolidated PAT of PKR36.1bn (EPS: PKR28.8) vs. PAT of PKR16.1bn (EPS: PKR12.9) in SPLY. The result is above our expectation due to higher than estimated NII and reversal in provisioning expense.
  • Net interest income clocked in at PKR84.2bn, up by 200%/24% YoY/QoQ. The increase is attributable to favorable pricing of investment book aided by healthy volumetric growth and higher share of zero cost deposits.
  • Non markup income declined by 21%/38% YoY/QoQ despite a healthy increase of 26%/90% YoY/QoQ in fee income. The decline is primarily driven by elevated gain on securities in preceding quarters.
Pakistan Fertilizer: 1QCY25 Preview: Lower offtakes to dent profitability - By Insight Research

Apr 10 2025


Insight Securities


  • As per NFDC, urea offtakes decreased by 38% YoY to clock in at 1.13mn tons in 1QCY25, from 1.82mn tons in SPLY. Similarly, DAP offtakes decreased by 52% YoY to reach at 143kt, compared to 299kt in SPLY. This decrease is primarily attributable to weak farm economics. Due to steep decline in offtakes, we estimate EFERT/FFC/FATIMA to post EPS of PKR2.0/9.1/3.3 in 1QCY25, respectively.
  • FFC is expected to post unconsolidated PAT of PKR12.9bn (EPS: PKR9.1) in 1QCY25, reflecting a decline of ~13%/9% YoY/QoQ, primarily driven by lower offtakes. In 1QCY25, FFC's urea offtakes decrease by 34%/36% YoY/QoQ to reach at 537kt, compared to 819kt in the SPLY and 839kt in previous quarter. Similarly, DAP offtakes decreased by 52%/77% YoY/QoQ. FFC's revenue is expected to clock in at PKR60.8bn, down from PKR104.9bn in SPLY. Gross margins are expected to increase by ~11ppts YoY, amid increase in product prices. Similarly on QoQ basis, gross margins improved by ~10ppts due to a one-off adjustment in the previous quarter following the FFBL merger. Additionally, company’s finance cost is anticipated to decrease by 35% YoY, primarily due to decline in interest rates. Other income is expected to witness a decrease of ~46% YoY, amid lower dividend income and interest rates. Whereas same is expected to increase by ~14% QoQ due to dividend income in the quarter and increase in cash & cash equivalent. Along with the result, we expect company to announce a cash dividend of PKR7.3/sh.
Pakistan Economy: Power tariff got slashed - By Insight Research

Apr 4 2025


Insight Securities


  • In a recent development, Prime Minister has announced a reduction in electricity tariffs by PKR7.41/unit for residential consumers and PKR7.59/unit for industrial users. This long-awaited relief had been widely anticipated in recent months, as rising administered energy prices were significantly eroding consumer purchasing power and were negatively impacting the overall economic activity. According to government sources, the IMF has endorsed this plan.
  • To address the issue, the government initiated measures such as revising/terminating contracts with IPPs and increasing the rate of PDL on petroleum products by PKR10/ltr last month, to finance tariff differential subsidy.
  • The primary contributors to the PKR7/unit tariff reduction includes termination of Power Purchase Agreements with certain IPPs along with renegotiation regarding hybrid take and pay model with others. Furthermore, the government plans to utilize the incremental revenue from the recent PKR10/ltr hike in PDL to fund Tariff Differential Subsidy. Moreover, Quarterly Tariff Adjustment of ~PKR1.9/unit, effective from Apr’25, along with expected fuel cost adjustments, will further support the government in implementing the announced relief of ~PKR7/unit.
Economy: Mar’25 CPI likely to clock in at 0.65% - By Insight Research

Mar 27 2025


Insight Securities


  • Headline inflation is set to fall below 1% mark in Mar’25 and is estimated to clock in at ~0.65%. The decline in CPI is mainly driven by lower food prices and is further aided by decline in housing and transport index. On MoM basis, inflation is likely to inch up by 0.8%, amid higher food prices due to Ramzan seasonality. While housing and transport index is likely to decline MoM amid negative FCA in electricity charges and lower motor fuel prices, respectively. This will take 9MFY25 inflation to ~5.4% compared to ~27.2% in SPLY.
  • Within the SPI basket, items that recorded significant increase in prices during the period are as follows, Tomatoes (42.5↑%), Fresh fruits (41.1↑%), Chicken (15.0%↑), Eggs (14.7%↑) & Sugar (11.4%↑). On the flip side, prices of the following items eased off during the month, Onions (20.7%↓), Tea (11.8%↓), Fresh vegetables (8.9%↓), Potatoes (7.3%↓) & Pulse gram (6.7%↓).
MCB Bank Limited (MCB): Defensive play with steady gains - By Insight Research

Mar 17 2025


Insight Securities


  • MCB boasts one of the highest current account mixes in the banking sector. MCB presents a compelling investment case due to its attractive dividend yield and stable strategic approach. The bank has been focusing on building a low-cost deposit base and with interest rates dropping sharply in the last few quarters resulting in narrowing NIMs and the removal of ADR-based taxation, the bank is now more focused on increasing zero-cost deposits in its mix.
  • We maintain our BUY stance on MCB, with a DDM & P/BV based target price of PKR345/sh for Dec’25. The stock is currently trading at a P/E & P/B of 6.9x & 1.3x on CY25 estimates, with a DY of ~13%
  • Key risk to our investment thesis are i) Lower than estimated growth in current accounts, ii) Deterioration in asset quality, iii) Higher than estimated operating expenses and iv) Abrupt changes in regulatory framework.
Indus Motor Company Limited (INDU): Analyst briefing takeaways - By insight Research

Mar 13 2025


Insight Securities


  • Indus Motor Company Limited (INDU) has conducted its corporate briefing to discuss financial results of the company. We have highlighted key takeaways from the briefing.
  • INDU posted a PAT of PKR9.96bn in 1HFY25 compared to PAT of PKR4.96bn in SPLY. The increase in profitability is driven by higher volumetric sales and healthy gross margins.
  • Management stated that improvement in gross margins is attributable to stable exchange rate, reduced fixed cost, higher localization level and efficient energy mix. To highlight, solar constitutes ~25% of total energy requirement.
Pakistan Petroleum (PPL): Solid foundations - By Insight Research

Mar 11 2025


Insight Securities


  • We reiterate our ‘BUY’ stance on PPL with reserves based Dec’25 target price of PKR280/sh, implying 54% potential upside. With the consecutive increase in gas prices for past four semi-annual revisions, cashflow situation has improved significantly in state owned oil & gas companies where PPL’s cash collection ratio improved to ~100% in 1HFY25 vs. 73% in SPLY. As per 1HFY25 accounts, company’s CFO reached to PKR48.6bn vs. PKR32.1bn in SPLY, attributable to higher recovery from Sui companies.
  • The company's cash flow is expected to remain robust going forward due to higher recoveries from Sui companies. Additionally, IMF program will ensure that the Government will continue to pass on cost pressure to consumer. This will ease the company’s liquidity constraints, enabling it to expand exploration activities, focus on growth-related projects, and provide higher payouts.
  • The Government has taken steps to enhance the viability of the sector and reduce reliance on imports by increasing local production. Any progress in resolving the gas circular debt pileup would be highly beneficial for PPL, as company holds overdue trade debts of PKR544bn (PKR200/sh) from SOEs, as per Dec’24 accounts. Furthermore, Barrick Gold’s feasibility study for Reko Diq highlights a compelling 22% dollarized IRR, reinforcing its potential as a significant value driver for the company. Based on our initial estimates, Reko Diq is projected to contribute PKR87/sh to PPL’s valuation, positioning it as a key catalyst for long-term growth.