KseAlert | Auto: EV Momentum Meets Market Friction: FY26 Budget Insights

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Market Wrap: Highlights of the day June 16, 2025 - By JS Research

Jun 16 2025

JS Global Capital

The market opened on a positive note, touching an intraday high of 122,903, but failed to sustain momentum. It eventually closed at 122,225, as profit-taking emerged later in the session. On the economic front, the State Bank kept the policy rate unchanged at 11%, aligning with expectations. Trading activity was dominated by small-cap stocks, reflecting short-term speculative interest. Market volume stood at 1,224mn shares, with top activity in WTL, PASL, FCSC, KOSM and MDTL. We advise investors to maintain a cautious stance and avoid aggressive exposure for now. Risk management remains key amid geopolitical uncertainty and macro developments.

Pakistan Economy: MPC statement & analyst briefing takeaways - By Insight Research

Jun 16 2025

Insight Securities

In today’s MPC meeting, SBP has kept policy rate unchanged at 11%, inline with market expectations. The committee noted that inflation recorded an uptick to clock in at ~3.5% in May’25, as expected and is likely to inch up in coming months and stabilize in target range during FY26. The impact of policy rate cut is kicking in as reflected in improved economic activity. The committee highlighted that trade deficit and shortfalls in planned inflows posses risk to external account. The MPC further elaborated that some of the actions announced in budget might have negative impact on trade balance.

Key developments highlighted by the MPC includes provisional GDP growth of 2.7% for FY25 and ambitious growth target of 4.2% for FY26, successful disbursement of US$1bn from IMF after completion of first review of EFF program, revised estimate of primary deficit at 2.2% of GDP and some decline in agriculture output compared to initial estimates.

Overall, MPC believes the current real policy rate is sufficiently positive to keep inflation within the target range of 5%–7%. However, timely receipt of planned inflows, achieving targeted fiscal consolidation and implementation of structural reforms are crucial for maintaining macroeconomic stability and ensuring sustainable economic growth. Moreover, fluid geopolitical situation and its impact on oil prices will remain a key variable for Pakistan.

Pakistan Economy: Geo-political tensions to weigh on the economy - By Taurus Reseach

Jun 16 2025

Taurus Securities

Escalation reaches new highs as Iran and Israel continue to trade blows at each other. Earlier, Israel had conducted pre-emptive strikes on Iranian nuclear and military infrastructure along with killing the country’s top military leaders and nuclear scientists. Since then Iran has conducted multiple rounds of retaliatory missile strikes inside Israel. The latter have been reciprocated by the bombing of more targets in Iran by the Israeli air force.

The situation remains fluid as neither side seems to be willing to exercise restraint. Iran has also called-off negotiations with the US on its nuclear program. Further, Iran has also alleged the role of the US and its allies in the region in backing the Israeli attacks, invoking the possibility of striking US and its allies’ air bases and embassies in the region in case of further escalation. The latter may broaden the conflict, adversely affecting the world economy.

Economy: Jun’25 Monetary Policy Review - By Taurus Research

Jun 16 2025

Taurus Securities

State Bank of Pakistan’s Monetary Policy Committee (MPC) in its meeting today kept the benchmark policy rate unchanged at 11.00%, in line with expectations. The MPC highlighted the marginal decline in core inflation in May’25, with expectations of NCPI trending upwards going forward – albeit remaining within the SBP’s target range of 5%-7%. Wherein, recent budgetary measures are likely to have limited impact on inflation, although upside risks to this outlook remain very high.

Economic growth is picking-up gradually, likely to gain more traction next year with the impact of earlier rate cuts still unfolding. The MPC also noted potential risks to the external sector in the form of: i) widening trade deficit; and ii) weak financials inflows. Additionally, certain proposed FY26 budgetary measures are also likely to widen the trade deficit more.

Moreover, the MPC also pointed towards the recent sharp increase in oil prices as a result of the evolving geo-political situation in the Middle-East. Accordingly, the MPC has flagged Pakistan’s external outlook as susceptible to multiple risks like heightened geopolitical tensions, volatility in international oil prices, possible adverse impact of proposed budgetary measures, and potential shortfalls in planned financial inflows.

Pakistan Fertilizer: Recovery sets in - By Foundation Research

Jun 16 2025

Foundation Securities

The dry spell in the Fertilizer sector is beginning to end with urea dispatches up 5/67% YoY/MoM respectively to 418KT in May’25. However, fertilizer offtake continued with its sluggish trend in 5MCY25 fueled by Govt’s decision to abolish support prices that has severely impacted farmer income. During 5MCY25, Urea/DAP sales recorded a decline of 31/19% YoY to only 1,768/340KT. Company wise analysis reveals that FFC urea offtake declined/inclined 28/92% YoY/MoM to 207KT in May’25, whereas EFERT/FATIMA recorded a jump of 86%/3.7x YoY and 76/84% MoM to 142/54KT, respectively. AGL urea offtake dwindled 26/25% YoY/MoM to reach 15KT in May’25. Industry DAP offtake jumped 2.4x YoY (flat MoM) in May’25 to 95KT. FFC/EFERT DAP offtake inclined 2.2/7.6x YoY and surged/dropped 27/57% MoM to 68/14KT, respectively, in May’25.

Fertilizer sales picked up pace in May’25: Pakistan domestic Urea offtake increased by 5/67% YoY/MoM in May’25, reaching 418KT. DAP offtake increased 2.4x YoY to 95KT, whereas no change was observed on a MoM basis. NP offtake jumped 60/6% YoY/MoM in May’25 to 76KT, while CAN offtake increased 147/86% YoY/MoM to 83KT. In May’25, industry urea inventory levels increased drastically to 1,316KT, an eight year high, due to sluggish demand amid weak crop pricing and previously high stock levels. Similarly, DAP inventory has reached 238KT. Company-wise urea inventory was recorded at 359/570/321/66KT for FFC/EFERT/FATIMA/AGL, respectively, in May’25. DAP inventory of FFC/EFERT reached 139/19KT.

Economy: The MPC keeps the policy rate unchanged at 11% - By Pearl Research

Jun 16 2025

Pearl Securities

The State Bank of Pakistan’s Monetary Policy Committee (MPC) held its meeting today wherein the committee decided to maintain the policy rate unchanged at 11% due to emerging risks amid evolving global backdrop which may exert external pressure as well as erosion of offsetting base year effects in its inflation outlook.

At its meeting today, the MPC decided to maintain the policy rate at 11%, viewing this stance as appropriate in light of emerging external risks and to safeguard macroeconomic stability and anchor inflation expectations. The Committee observed that the uptick in headline inflation to 3.5% YoY in May 2025 aligned with earlier projections, as the favorable base effects on food prices gradually eroded. At the same time, core inflation recorded a slight moderation, and inflation expectations among households and businesses further softened.

Despite the more favorable inflation readings, the MPC highlighted the persistence of significant external risks that could undermine Pakistan’s macroeconomic stability. In particular, the Committee drew attention to heightened global economic uncertainty, driven by escalating trade protectionism and tariff measures, alongside volatile geopolitical conditions that continue to fuel instability. The MPC also highlighted that rising geopolitical tensions are contributing to increased volatility in international oil prices, thereby amplifying external vulnerabilities. Additionally, the potential adverse effects of proposed fiscal measures and the risk of shortfalls in planned external inflows were noted as factors that could further exacerbate inflationary pressures and undermine overall price stability.

Cement: Lahore High Court announces 6% royalty decision against Cement Manufacturers - By Topline Research

Jun 16 2025

Topline Securities

In a major development today, Lahore High Court larger bench has announced its decision against the Punjab based cement manufacturers regarding royalty case. The companies will have to pay the royalty amount at prescribed formula of 6% of retention price.

Companies may go for appeal in Supreme Court now, however, this decision to go for review is not final yet from cement manufacturers.

To recall that manufacturers based in Punjab were already provisioning for their raw material cost based on formula of 6% of retention price.

Economy: Middle East Conflict-Implications for PSX - By Chase Research

Jun 16 2025

The conflict erupted after Israel launched surprise airstrikes on Iranian nuclear and military facilities, killing several high-ranking generals and nuclear experts.

In retaliation, Iran fired over 150 ballistic missiles and more than 100 drones at Israel, targeting military sites and urban centers, in what it called "Operation True Promise III".

Both sides have since traded escalating rounds of attacks: Israel has struck more than 250 targets in Iran, including nuclear development sites, missile launch facilities, energy infrastructure, and the Defense Ministry headquarters in Tehran.

Fauji Fertilizer Company Ltd. (FFC): FFC received board approval to submit EOI for PIACL privatization - By AKD Research

Jun 16 2025

AKD Securities

Fauji Fertilizer Company Ltd. (FFC) has announced that its Board of Directors, in a meeting held on June 13, 2025, approved the submission of an Expression of Interest (EOI) and prequalification documents to Privatization Commission for the potential acquisition of stakes in Pakistan International Airlines Corporation Ltd. (PIACL) and undertaking a comprehensive due diligence exercise as part of the process.

PIACL, the national flag carrier of Pakistan, holds the highest market share in the domestic aviation sector at 19% and operates fleet of 34 aircraft. In a major restructuring effort last year, gov’t carved out net liabilities amounting to PkR654bn and non-core assets into PIA Holding Company Ltd. (Holdco of PIACL), making PIACL a debt-lite entity. Notably, PIACL was EBITDA-positive in CY24, with a reported equity value of PkR3.6bn as of Dec’24.

To recall, Privatization Commission had set a minimum bid price of PkR85bn in the previous privatization attempt. While, FFC has cash and ST investments worth PkR147bn on a standalone basis as of Mar’25.

Economy: MPS Preview: A Cautious Pause as Uncertainties Mount - By Pearl Research

Jun 16 2025

The Monetary Policy Committee (MPC) of the State Bank of Pakistan (SBP) is expected to convene on 16 th June, 2025, wherein we expect the Committee to maintain the key policy rate unchanged at 11%.

Our Monetary Policy Announcement History the view that the MPC will opt to hold the policy rate steady at 11% in its forthcoming meeting is predicated on a confluence of evolving global backdrop which may exert external pressure as well as erosion of offsetting base year effects.

Persistent global economic policy uncertainty and geopolitical risks: Notably, the Global Economic Policy Uncertainty index escalated by 249% YoY in April 2025 amid heightened trade tensions due to uncertainty over tariff measures which can disrupt global supply chains, raise production costs, and delay investment flows, resulting in reemergence of price pressures in Pakistan. Compounding these challenges, the Middle East has witnessed a dangerous escalation in hostilities following Israel’s unprecedented strikes on Iran’s nuclear sites. Iran’s retaliatory launch, coupled with aggressive rhetoric from both sides has severely heightened regional risk, resulting in a surge in global crude prices. Given the dependence on imported oil, Pakistan external account remains highly vulnerable to sustained oil price volatility as Petroleum imports account for nearly 30% of total imports. Sustained escalation in geopolitical volatility can, therefore, result in depreciation of the PKR and escalation in the import bill which can inflate the CPI.

Auto: EV Momentum Meets Market Friction: FY26 Budget Insights - By HMFS Research

Jun 11 2025

HMFS Research

The FY26 Federal Budget presents a mixed outlook for Pakistan’s auto sector. While policy direction supports electric vehicle (EV) adoption through tax differentiation, purchasing restrictions on non-filers and the withdrawal of GST concessions on entry-level vehicles may weigh on demand. Additionally, phased tariff liberalization offers cost relief on CKD inputs but raises competitive risks from cheaper CBU imports.

The enforcement of a ban on vehicle booking, purchase, and registration for non-filers is expected to constrain demand in the formal economy, particularly in the >1000cc passenger car segment. Meanwhile, exemptions apply to motorcycles, rickshaws, tractors, and pickups up to 800cc.

This measure may hinder volume recovery in the >1000cc segment, though exemptions for motorcycles and rickshaws offer limited relief for ATLH and SAZEW given the distinct customer base.

Morning News: Rs17.6 trillion budget to be presented today - By HMFS Research

Jun 10 2025

HMFS Research

The federal budget 2025-26 will be unveiled by Minister for Finance Muhammad Aurangzeb on Tuesday (today) in parliament. The budget size has been envisaged at Rs17.6 trillion against Rs18.78 trillion for the last fiscal year. The FBR’s tax collection target has been envisaged at Rs14.02 trillion for the next budget against revised estimates of Rs12.33 trillion for the outgoing fiscal year. However, it will be really hard for the FBR to display the revised target of Rs12.332 trillion on June 30, 2025. With expectations of 7.5 to 10 per cent increase in salaries of public sector employees, the Ministry of Finance has prepared four proposals for increasing pay and pension ranging from 5 to 12.5 per cent. The Ministry of Finance wants to restrict this increase in the range of 7.5 to 10 per cent in the next budget. Disparity Allowance up to 30 per cent is expected to be provided for grade 1 to 16.

Pakistan missed its GDP growth target of 3.6% in the outgoing fiscal year, posting a figure of 2.7%, revealed the Economic Survey 2024-25, unveiled by Finance Minister Muhammad Aurangzeb on Monday. Commenting on the global economy, Aurangzeb, former head of one of Pakistan’s largest commercial banks, noted that the global GDP growth in 2023 stood at 3.5%, which was reduced to 3.3% in 2024 and is now projected to be 2.8% according to the latest estimates. “GDP growth in 2023 stood at -0.2%, which grew to 2.5% in FY24. We announce a 2.7% GDP growth for FY25,” said Aurangzeb.

The Federal Board of Revenue (FBR) has almost finalized Finance Bill (2025-26) and expected to announce new taxation measures of nearly Rs 200 billion of sales tax and Federal Excise Duty (FED) in the fiscal budget (2025-26). The revenue generation measures may include 18 percent sales tax on the import of solar panels. Among other proposals, 18 percent sales tax would be imposed on e-commerce. The FBR has finalized items which would be deleted from the Sixth Schedule (Exemption Schedule) and Eighth Schedule-lower rate of sales tax of the Sales Tax Act. The government my increase sales tax rate on a large number of items subjected to lower rate of sales tax or concessionary sales tax rates in coming budget (2025-26).

Economy: Pre-Budget Insights FY2025–26: Navigating Policy Under IMF Stewardship - By HMFS Research

May 30 2025

HMFS Research

The Government of Pakistan is preparing the FY25–26 Federal budget under heightened fiscal scrutiny, driven by the policies of the ongoing ~USD 7bn IMF Extended Fund Facility (EFF). The program now includes more than 50 structural benchmarks—11 of which are newly introduced—ranging from energy sector reforms and subsidy rationalization to enhanced revenue mobilization and governance yardsticks. The budget thus represents not only a domestic fiscal roadmap but also a key compliance document for sustaining multilateral support and unlocking future disbursements.

The government’s evolving fiscal strategy has a renewed emphasis on broadening the tax base, rationalizing expenditures, and targeting public support mechanisms more efficiently. These efforts are framed within an IMF-led framework prioritizing durable revenue generation, resolution of circular debt in the energy chain, and improved targeting of social safety nets. The budget’s structure and sectoral focus will offer critical signals on the direction of policy, clarity of fiscal measures, and the viability of Pakistan’s external financing roadmap—estimated to require ~USD 19.3bn in FY26 alone.

Morning News: Budget features bold measures for ‘strategic direction - By HMFS Research

May 27 2025

HMFS Research

Finance Minister Muhammad Aurangzeb on Monday pledged that the upcoming federal budget would introduce “bold measures” to steer the national economy in a strategic direction and make available whatever support is required by the armed forces. Further said that every possible support would be provided to the armed forces, stressing that it was a national need in light of recent cross-border aggression, not just a military requirement. He said the government would ensure simplified tax returns and forms for the salaried class. He said that around 70 to 80 percent of salaried people did not hold equity and fixed-income portfolios. “They receive salaries through bank accounts with tax deducted at source. They should not have to fill in 140-150 data points,” he said, adding that the government aimed to reduce that number to just nine — five for wealth tax and four for income tax. He said the process would now be accelerated, with transactions involving Pakistan International Airlines (PIA), three power distribution companies and some financial institutions expected to reach completion by the end of this year.

The Finance Ministry said on Monday that the presentation of the Federal Budget 2025-26 has been delayed from June 2 to June 10 due to disagreements with the International Monetary Fund (IMF) over key budgetary figures, including subsidy allocations. “The budget announcement has been delayed by a week because the Finance Ministry’s figures are still under reconciliation. The IMF has placed a cap on subsidies,” he added. He further noted that the IMF has declined to make any changes to the revised budget figures recently presented to the Fund’s team.

The government is seriously considering reducing federal excise duty (FED) on beverages (aerated water) in the coming budget (2025-26) to attract foreign investment in this sector. Foreign investors including Turkish investors have promised more foreign direct investment in beverage sector in case of tax relief in the coming budget (2025-26). Leading global players with Turkish and Korean franchise investors have invested over USD 2 billion in Pakistan since 2018. However, no new investments have been made since 2023 due to the current fiscal environment. The industry contributes over Rs 175 billion in taxes annually (FED, GST, income tax, super tax) - one of the highest taxed sectors.

Morning News: Budget put off to June 10 as talks with IMF continue - By HMFS Research

May 26 2025

HMFS Research

The government on Friday postponed the announcement of the federal budget 2025-26 by more than a week to June 10 amid inconclusive discussions with the International Monetary Fund (IMF) on some of the critical fiscal measures and to avoid the Eid break during the budget session. Informed sources said the visiting IMF staff mission had multiple rounds of discussion on Friday, including a wrap-up session with Finance Minister Muhammad Aurangzeb.

In a significant development, the International Monetary Fund (IMF) and Pakistani authorities have reached a preliminary agreement on a comprehensive financial framework, paving the way for continued negotiations on the budget for fiscal year 2025-26. Officials in the finance ministry indicate that discussions are set to advance in the coming days, with the goal of finalising crucial fiscal policies, including the revenue collection target for FY26, development outlay, defence expenditure, and the highly debated tariff rationalisation plan for the industry.

The Asian Infrastructure Investment Bank (AIIB) has approved $240 million in funding for the second phase of the Karachi Water and Sewerage Services Improvement Project (KWSSIP). The new phase will increase water availability, improve the safety of water and sewerage services in Karachi, and improve the financial and operational performance of the Karachi Water and Sewerage Corporation (KWSC).

Market Wrap: KSE-100 Stays Resilient Amid Budget Uncertainty - By HMFS Research

May 23 2025

HMFS Research

The KSE-100 index exhibited a choppy trajectory today as investor sentiment remained cautious ahead of the FY26 budget announcement. Ongoing discussions with the IMF and anticipation of new conditionalities kept market participants on edge, curbing aggressive positions. Still, broader optimism anchored in improving macroeconomic fundamentals— such as expected external financing from the UAE and World Bank, and renewed efforts to enhance trade and exports—offered some stability amidst the turbulence. After hitting an intraday high of +389 points, the index ultimately settled at 119,103, recording a marginal decline of 50 points. Market activity reflected a wait-and-see approach, with muted volumes of 99.8mn shares on the KSE-100 and 337.1mn shares traded overall. Leading the board were BBFL (33mn), WTL (19mn), and DOL (16mn). Going forward, the market is likely to remain sensitive to unfolding budgetary disclosures and IMF-related developments. Nonetheless, a constructive macroeconomic backdrop could provide the necessary support to steer equities toward recovery. Investors are advised to remain vigilant, closely track policy cues, and prioritize fundamentally sound stocks with long-term value potential.

Morning News: Fragile ceasefire holds, permanent one is in sight - By HMFS Research

May 12 2025

HMFS Research

A ceasefire between India and Pakistan was holding on Sunday after both sides blamed the other for initial violations, as US President Donald Trump vowed to help the arch-rivals find a solution on the disputed Kashmir region. The truce that took effect on Saturday followed four days of intense fighting between the nuclear-armed neighbours. In the worst fighting in nearly three decades, they fired missiles and drones at each other’s military installations, killing almost 70 people.

The International Monetary Fund (IMF) Executive Board on Friday approved a total of $2.3 billion in funding for Pakistan, comprising the disbursement of a $1 billion tranche under its ongoing Extended Fund Facility (EFF) and the launch of a new $1.4bn Resilience and Sustainability Facility (RSF). The latest approval brings total disbursements under the $3bn EFF program to $2.1bn. The $1bn tranche will be disbursed immediately, while the RSF financing will be rolled out over the next 28 months to support long-term sustainability and climate resilience efforts.

Emerging-market (EM) issuers are variously exposed to direct and indirect impacts from the global trade war, Fitch Ratings says in a new report. Credit pressures may become most evident in EMs where tariff effects combine with aggravating factors or add to preexisting pressures, even if direct US tariff exposures are small. APAC’s high trade openness and exposure to US demand leave it particularly exposed to direct tariff risks, but all regions will be affected, with Fitch expecting global growth to fall below 2% this year.

Cement: Debt Relief Ahead - Rate Cut Catalyzes Cement Sector Recovery - By HMFS Research

May 7 2025

HMFS Research

The cement sector remains a prime beneficiary of monetary easing in Pakistan, given its highly leveraged capital structure and dependence on financing for large-scale projects such as plant expansions and machinery upgrades. With the State Bank of Pakistan slashing the policy rate by 100 basis points to 11%, the sector is set to gain meaningfully through lower debt servicing costs.

Cement producers have made notable strides toward energy independence by investing in renewable sources, a move that has helped insulate operations from surging fuel and electricity tariffs. Additionally, the uptrend in cement export dispatches bodes well for companies with significant export exposure, signaling robust topline and margin expansion potential in FY25. The recent rate cut further strengthens this positive trajectory, offering dual support through reduced financial expenses and improved operational efficiency.

Below is the potential EPS impact of this 1% rate cut on the top cement players, ranked by capacity. Among them, FCCL, BWCL, and LUCK, owing to their leverage profiles, are expected to benefit the most from the rate reduction.

Textile: Rate Cut Ushers Tailwinds for Textile Sector – EPS Gains on the Horizon - By HMFS Research

May 6 2025

HMFS Research

The recent 100bps policy rate cut by the State Bank of Pakistan on 5th May 2025, bringing the benchmark rate down to 11%, is poised to provide a meaningful boost to the profitability of textile companies under our coverage. Given the sector’s reliance on debt to finance working capital, capital expenditures, and modernization initiatives, the reduced cost of borrowing is expected to translate into improved earnings across the board.

Textile companies typically operate with high working capital requirements, often funded through short-term borrowing. This dependency on credit has rendered them vulnerable to the high-interest rate environment of recent years. However, with the easing monetary stance, finance costs are projected to decline, thereby easing pressure on bottom lines and enabling reinvestment into operational efficiencies.

Nishat Mills Limited (NML), while historically reliant on debt—with approximately 72% of its capital structure funded through borrowings—has demonstrated financial prudence in recent periods. In the latest financial disclosures (Mar’25), both long-term debt levels and finance costs have recorded a y/y decline of 8.6% and 25% respectively, reflecting the company’s efforts toward deleveraging, optimizing capital structure and an impact of the previous year’s policy rate cuts. With a substantial portion of borrowings historically allocated to short-term working capital needs, the latest rate cut further supports this trajectory by reducing the cost of residual debt. This positions NML to enhance EPS by PKR ~1.46 through lower finance charges, while also creating headroom to selectively re-leverage for future growth initiatives under a more favourable monetary environment.

Market Wrap: Market Holds Ground Amid Cautious Sentiment - By HMFS Research

Apr 22 2025

HMFS Research

The Pakistan Stock Exchange wavered between confidence and caution today as the KSE-100 index rode early optimism but lost steam by session close. Bolstered by the low SPI inflation print, which rekindled expectations of a policy rate cut in the upcoming MPC meeting, the index surged to an intraday high of 834 points. In parallel, the ongoing result season kept the market buzzing with selective value buying. However, the enthusiasm was moderated by uncertainty around whether corporate earnings would meet or miss expectations. This hesitancy prompted profit-taking towards the tail end of the session, causing the index to close nearly flat at 118,430—up by a marginal 47 points. Nonetheless, the conviction behind the day’s activity remained intact, with robust participation. The KSE-100 saw 354mn shares traded, while the broader market recorded an impressive 740mn shares. Volume leaders included BOP (117mn), POWER (68mn), and PIBTL (59mn). Looking ahead, the market retains room for upward movement given its proximity to all-time highs, but its trajectory will likely hinge on the strength of upcoming earnings and policy clarity. For now, a balanced approach focused on fundamentally robust scrips remains key as investors navigate this phase of cautious optimism.