Is now the time to buy Pakistan cement stocks?

March 25, 2026 (MLN): The Pakistan cement sector has recently hit a "Deep Value" valuation, creating a significant opportunity for investors.

The Pakistani cement sector has reached a critical valuation floor, which presents what is described as an asymmetric risk-reward profile.

Currently trading at an Enterprise Value per ton (EV/ton) of approximately US$29.8, the industry consisting of D.G. Khan Cement, Maple Leaf Cement, Cherat Cement,  Kohat Cement,  Pioneer Cement, Fauji Cement is sitting firmly in its historical "Deep Value" band, according to a cement sector research report by Intermarket Securities (IMS).

This sharp correction in stock prices is largely attributed to the ongoing Iran-US conflict, which has triggered a spike in international oil and coal prices major cost drivers for cement manufacturers.

However, it is anticipated that cooling geopolitical tensions and a subsequent normalization of energy costs could act as a powerful catalyst for a sector-wide recovery, as the current weakness is viewed as a temporary result of global supply-chain shocks rather than domestic fundamental failure.

This valuation level has historically preceded massive gains across the sector.

The research, which spans 66 quarters and 392 observations from 2008 to 2024, reveals that when the sector’s EV/ton falls to US$30 or below, the average one-year forward return stands at a staggering 107%, with a 92% probability of generating a positive return.

The brokerage notes that while the current macro environment is pressured by high input costs, the domestic political dynamics in the US and the upcoming midterm cycle may force a de-escalation in the Middle East, providing the necessary breathing room for Pakistani cement valuations to rebound.

As valuation bands move higher, both the return potential and the likelihood of profitability decline progressively, making the current entry point one of the most attractive in over a decade.

Historical Return Analysis

The following table illustrates the relationship between entry valuation (measured in EV/ton) and the subsequent 1-year performance.

The data shows a clear trend: the cheaper the entry point, the higher the average return and the lower the risk of loss. At the "Deep Value" stage, the success rate is almost guaranteed historically at 92%.

Current Company Valuations

This table tracks the specific EV/ton for leading companies in the sector as of March 2026.

DG Khan Cement (DGKC) stands out as the most undervalued at US$12.9/ton, while the overall sector average of $29.8 places the entire industry within the "Deep Value" category.

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