§  Lucky Cement Limited (LUCK) has announced it will increase its Pezu Plant’s (located in the KPK) capacity by 3.15Mn tons pa, taking the total plant capacity to 10Mn tons pa.

§  The expansion is expected to enable the Company cater to the growing demand in the local cement industry as economic activity accelerates along with uptick in both retail and mega infrastructure development projects, the notice highlighted.

§  We believe the expansion will bring the Company’s total production capacity to 17Mn tons pa., up 22% from the current production capacity of 14Mn tons pa.

§  Project costs are yet to be finalized. However, the management expects construction on the project to commence in the current financial year, with expected completion timeline of 1.5-2 years.

§  We expect the upcoming expansion to contribute PKR 6.3/sh. in incremental earnings FY24 onwards.

§  Nevertheless, we highlight that the above earnings estimate is subject to the financing mix to fund the project, prevailing market conditions and pricing dynamics in the North.

§  LUCK has a domestic cement market share of 13.7%, as per FY20 financials.

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