Pakistan Tobacco Company Limited (PAKT) reported earnings per share of PKR 116.85 for CY25, compared to earnings per share of PKR 108.74 in FY24. Furthermore, in 1QCY26, the company reported earnings per share of PKR 36.57, compared to earnings per share of PKR 24.53 in the same period last year (SPLY). Total turnover grew by 15%, primarily supported by a 44% increase in export turnover.
However, domestic cigarette volumes remained under pressure, declining by approximately 2% during the period. Management highlighted that illicit and smuggled cigarettes remain the industry’s primary challenge, with nearly 50% of total cigarette consumption in Pakistan estimated to originate from the illicit market. While the illicit share has declined from 54% to around 49.5% due to improved enforcement measures and fiscal stability.
PTC launched Capstan Select at a retail price point of PKR 180, specifically targeting illicit local brands operating within the PKR 150–200 segment. The company also introduced Lucky Strike, an internationally recognized premium brand, aimed at competing with high end smuggled products in the market.
Management highlighted that the Modern Oral category Velo achieved a key milestone by reaching break even for the first time in five years and currently contributes approximately 5% of net sales. Exports continue to serve as a hedge against foreign exchange exposure, and PTC intends to maintain its focus on expanding exports across all product categories.
However, tobacco leaf exports remain challenged by regulated domestic pricing, which reduces competitiveness in international markets. Management highlighted that gross margins increased to approximately 56% in 1QCY26. However, they cautioned that this improvement is cyclical in nature and may normalize over the course of the year due to planned brand investments and procurement of a new, higher cost tobacco crop beginning in June.
Management clarified that the closure of the Afghanistan border has not materially reduced the inflow of smuggled international cigarette brands, as a significant portion originates from Jebel Ali and enters through Karachi Port. According to management, the primary issue remains domestic illicit manufacturing.
Tobacco inventories have more than doubled since 2022, reflecting the highly regulated nature of tobacco procurement. Management explained that PTC is legally obligated to purchase its allocated tobacco quota irrespective of actual production requirements, resulting in inventory coverage of approximately 20 months.
Management clarified that the elevated payout in 2025 represented the distribution of prior year dividends that had previously remained restricted due to government limitations on fund repatriation.
Management indicated that, in the absence of any major excise shocks in the upcoming budget and assuming continued enforcement actions, the company is targeting single digit growth in 2026. PTC also continues to advocate for Point of Sale integration under the Track and Trace system to further curb illicit sales.
Important Disclosures
Disclaimer: This report has been prepared by Chase Securities Pakistan (Private) Limited and is provided for information purposes only. Under no circumstances, this is to be used or considered as an offer to sell or solicitation or any offer to buy. While reasonable care has been taken to ensure that the information contained in this report is not untrue or misleading at the time of its publication, Chase Securities makes no representation as to its accuracy or completeness and it should not be relied upon as such. From time to time, Chase Securities and/or any of its officers or directors may, as permitted by applicable laws, have a position, or otherwise be interested in any transaction, in any securities directly or indirectly subject of this report Chase Securities as a firm may have business relationships, including investment banking relationships with the companies referred to in this report This report is provided only for the information of professional advisers who are expected to make their own investment decisions without undue reliance on this report and Chase Securities accepts no responsibility whatsoever for any direct or indirect consequential loss arising from any use of this report or its contents At the same time, it should be noted that investments in capital markets are also subject to market risks This report may not be reproduced, distributed or published by any recipient for any purpose.