FCCL announced 2QFY16 EPS of PkR1.26, up 57%YoY/51%QoQ, mainly due to (i) higher dispatches, (ii) over 55% reliance on in-house FO based captive and WHR, and (iii) incorporation of fuel price adjustment of previous months in the quarter. The earnings came in slightly above our expectation of Pkr1.14/share. We reiterate our Buy rating on FCCL, with a revised target price of PkR45.8/share.
The company also announced an interim cash dividend of PkR1.75/share, comfortably beating the street consensus. We flag this as a major development, as the stock currently offers 9.4% forward dividend yield, vs. 3.8% D/Y of the IMS Cement Universe. In our view, the sustainability of margins close to current levels, gives a support to company&rsquo;s high payout policy.
Consequently, we revise our EPS estimates of FCCL for FY16F to PkR4.42 (up 3% to previous estimates), to account for 2QFY16 results and reiterate our target price at PkR45.8/share, offering 15.8% upside coupled with lavish D/Y of 9.4% in an undoubtedly growth driven sector.
By: InterMarket Securities Private Limited