Descon Oxychem Limited (DOL) reported earnings per share of PKR 4.51 for FY25, compared to PKR 2.69 in FY24. Furthermore, in 1QFY26, the company reported earnings per share of PKR 0.62, compared to earnings per share of PKR 1.00 in the same period last year (SPLY).
The management sees significant potential to rebuild export volumes, which have been declining over the past few years. Their target is to increase current export volumes by at least 50%. In the Middle East, the company has identified strong opportunities in surface water treatment and food packaging segment.
The company has also made progress on its spray grade product, which is expected to generate additional volumes in the food grade market. Notably, food grade products command a significant premium over technical grade products. Export margins, however, remain lower than domestic margins for technical grade products, as the company absorbs freight costs to stay competitive internationally.
The total domestic market stands at roughly 80,000 tons annually, with about 90% of demand coming from the textile industry. The company is actively engaging with regulatory authorities to curb misuse of the Export Facilitation Scheme (EFS) and to push for the extension of antidumping duties to counter unfair competition. Combined expected production is estimated at around 67,000 tons this year, with a steady upward trend.
Management expects production from the new competitor estimated at 36,000 tons to primarily replace low cost imports previously originating from Bangladesh. The company continues to face headwinds from widespread misuse of the EFS facility, with nearly 80% of imports entering the country through EFS channels.
The company is installing a 2-megawatt solar power plant, which is expected to generate substantial savings in electricity costs. Current power requirements range between 3 and 3.5 MW. For FY26, the government has revised the gas blend ratio from 75% RLNG and 25% system gas to a 50:50 mix of RLNG and system gas.
The company also plans to undertake its annual turnaround during the year. Import pricing continues to set the market benchmark, with Korean products landing at around USD 450 per ton and Bangladeshi products arriving at approximately USD 325 per ton.
Important Disclosures
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