In 1HFY25, CSAP reported a net profit of PKR 672.99 million (EPS: PKR 8.67), reflecting a 76% YoY decline from PKR 1.00 billion (EPS: PKR 12.93) in 1HFY24.
During the period, CSAP divested 27.415 million shares of AEL, reducing its shareholding to 9.15%. The remaining shares will be sold at an optimal price. Proceeds from the sale will be allocated toward market investments, plant and machinery upgrades, and expansion into new areas.
Dividend income from AEL amounted to PKR 358 million as of December 31, 2025. The cotton division remained non-operational for the last two consecutive year due to unfavorable market conditions. Fixed and cash expenses remain minimal, and the company aims to avoid losses in this segment. The billet division has been classified as a discontinued operation following the board’s decision to exit the segment due to an uneven playing field in sales tax. Arrangements are underway for the sale of the plant. The freehold land will be reclassified as investment property. The cost of assets for sale is PKR 464 million, with an estimated realized gain of PKR 500 million.
The plant has an annual production capacity of 85,000 MT of steel billets. CSAP maintains a strategic interest in a 100-MW solar power project through Solution de Energy (Private) Limited, pending approval from NEPRA. The debt-to-equity ratio was reported at 4.5 : 94.5, while the gearing ratio stood at 25.3%, higher than FY24, driven by increased raw material investments.
Stock-in-trade increased due to higher raw material purchases for the oil and gas sector. K-IV Phase I remains incomplete, with PL-1 still in progress. The K-IV augmentation project will be funded by the World Bank. Before Phase II commences, the Karachi augmentation project must be executed, though it has yet to begin. Phase I, currently under execution, has been extended to June 30, 2026. A small portion of the Karachi augmentation project was recently tendered but remains unawarded. Upon completion of Phase I and K-IV augmentation, total capacity will increase to 600 million gallons per day.
CSAP has no plans for a stock split. Management anticipates increased demand in the oil and gas infrastructure development, supported by a narrowing delta between interest rates and project returns, incentivizing companies to pursue development projects.
CSAP remains well-positioned to meet this demand, with further capacity expansion expected post-K-IV completion. CSAP procures high-thickness HRC from China at international benchmark prices set by the Shanghai Futures Exchange. CSAP holds a dominant position in the API-grade segment in Pakistan, with no major domestic competitors. Management expects a positive outlook for the upcoming quarter.
The contract for the supply of 40-inch diameter coated steel line pipes is scheduled for execution in the next quarter and completion in 1QFY26. Major customers are expected to issue tenders in the coming quarter, with smaller orders slated for execution in March-April. Delays in the K-IV project may push orders into the next fiscal year. The company does not expect US tariffs to materially affect raw material costs.
Important Disclosures
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