June 30, 2026 (MLN): Barkat Frisian Agro Limited (PSX:BFAGRO) is projected to reach a target price of Rs45 per share from its current market price of around Rs36, offering an upside of 25% from current levels by June 2027, as the company's Faisalabad capacity expansion and export recovery position it for accelerated earnings growth.

JS Global, in its latest company update, reiterated a Buy rating on BFAGRO.

Following 60% underperformance against the KSE-100 Index over FY26TD, the stock trades at an FY27F P/E of 10.4x, yielding a PEG ratio of 0.6x, which the brokerage views as an attractive entry point.

The investment case is supported by strong demand driven by urbanisation, demographic growth, evolving dietary preferences, and rising consumption of confectionery products, alongside strategic Dutch backing, a scalable business model, and a 10-year Special Economic Zone (SEZ) tax exemption.

The brokerage forecasts a 5-year revenue CAGR of 17% and EPS CAGR of 28%, driven by capacity expansion, export ramp-up, and improving margins.

Market Opportunity

Pakistan's per capita egg consumption stands at approximately 75 eggs across a population of 245mn, translating into an annual market of roughly 18bn eggs, with the transition from raw shell eggs to value-added liquid and pasteurised products still in early stages.

BFAGRO supplies the HoReCa segment, sauce and mayonnaise producers, and the biscuit and confectionery industry, with clients including Mondelez, Kerry, Sri Lankan Airlines, and Gulf Central.

While Wahdat Poultry's recent entry introduces a domestic competitor in the pasteurised egg segment, the brokerage notes the market remains significantly underpenetrated.

Expansion and Exports

The company's new Faisalabad M3 Industrial City facility, expected to contribute from FY27, will add 12,000 tons of liquid egg capacity, lifting total installed capacity to 29,000 tons; trial runs have already started.

On the export side, more than 90% of BFAGRO's exports go to the UAE, a market that was constrained by the Middle East conflict but is expected to recover.

Export revenue is projected to reach 14% of total revenue by FY28F, up from approximately 2% in FY22. Gross margins are expected to expand to 14.7% in FY27F from 13.5% in FY25 as the export mix improves pricing.

Strategic Investments

BFAGRO has commenced construction of a dried egg powder facility, with equipment orders placed and Letters of Credit established.

The company is also progressing on backward integration through poultry layer farming, having acquired land and initiated construction, alongside establishing a UAE subsidiary to strengthen its regional presence.

Key Financial Projections

Source: Company accounts, JS Research

The company's balance sheet has also strengthened considerably, with debt-to-equity falling from 1.8x in FY22 to 0.16x in 9MFY26, and net cash of Rs636mn estimated by FY28.

BFAGRO is expected to begin dividend payouts from FY27, once the new capacity comes online.

Key Risks

Risks to the investment thesis include low barriers to entry, with Wahdat Poultry's entry as a case in point; customer concentration, as EBM alone accounts for roughly 35% of sales; and supply chain disruptions, with a 10% volume cut estimated to shave 8-9% off FY27F EPS.

The brokerage notes these risks are partially mitigated by BFAGRO's first-mover advantage and technical expertise from Frisian Egg International, and has incorporated a 20% haircut to sector multiples to account for them.