This financial report provides a comprehensive Pakistan Tobacco Company analysis, reviewing revenue trends, margin movements, cost pressures, and regulatory challenges from 2019 to Q1 2025. The report also examines earnings, dividend yields, and future performance indicators for investors and industry observers.
Revenue Performance and Profitability
Full-Year FY2024 Financial Highlights
- Total Revenue: PKR 121.08 billion (↑10.1% YoY)
- Net Profit: PKR 27.78 billion (↓4.1% YoY)
- Earnings Per Share (EPS): PKR 108.74
- Net Margin: 22.95%
Revenue growth in FY2024 was driven by product pricing and stable domestic demand. However, inflation in raw materials and a shortage of tobacco leaf led to a 21.4% increase in cost of sales, slightly compressing margins.
Q1CY25 Financial Overview
- Net Sales: PKR 30.65 billion (↑28.2% YoY)
- Net Profit: PKR 6.27 billion (↑22% YoY)
- EPS: PKR 24.53
- Gross Margin: 45.23%
- Operating Margin: 34.53%
Q1 2025 results show continued momentum, with significant growth in the VELO (oral nicotine) category and operational efficiencies contributing to improved profitability.
Cost Structure and Operational Efficiency
| Indicator | FY2024 | TTM (2025) |
|---|---|---|
| Gross Margin | 49.4% | ~50.9% |
| Operating Margin | 36.71% | ~37% |
| Net Margin | 22.95% | ~22.6% |
| Dividend Yield | ~14% | ~9.6% |
| Debt-to-Equity | 0% | 0% |
| Cash Position | PKR 11.4 billion | Net Cash ~PKR 7.9 billion |
Administrative costs decreased by 13% in 2024 due to reduced IT and overhead expenses, while distribution costs rose by 4.8%, driven by logistics and fuel price increases.
READ MORE: British American Tobacco Pakistan – 2025 Overview & Market Insights
Regulatory Pressures and Market Risks
- Excise Duty Increases: Federal excise duty on tobacco products remains high, contributing 10–12% of total federal excise revenue.
- Illicit Market Share: Illicit cigarettes now account for 58% of the total market, reducing legal market volume but not affecting tax collection significantly, as legal companies like PAKT pay nearly 100% of tobacco-related taxes.
- Leaf Supply Challenges: Government-imposed procurement caps led to a 14% reduction in tobacco leaf quotas in 2024, prompting protests from local farmers.
- New Taxation Policy (FY2025-26): Introduction of 6% withholding tax on tobacco distributors may affect margins.
- Export Tax: Newly applied tax on exports may put pressure on margins despite increased export volumes.
Market Position and Valuation
- Current Stock Price (July 2025): PKR 1,320
- Price-to-Earnings Ratio (TTM): ~11.66×
- Price-to-Book Ratio: ~6×
- Return on Equity (ROE): ~53%
- Beta (Volatility): 0.20 (Low risk)
- Dividend Payout Ratio: ~110%
The company continues to provide attractive dividend returns, making it a preferred stock for income-focused investors on the PSX.
Outlook and Strategic Position
| Area | Outlook Detail |
|---|---|
| Revenue Growth | Supported by VELO segment and pricing strategy |
| Margin Strength | Maintained through cost control and efficient operations |
| Dividend Potential | Strong cash position supports continued high-yield payouts |
| Risks | Taxation, inflation, export duty, and illicit market competition |
| Investor Sentiment | Positive technical indicators; analysts rate the stock a strong long-term buy |
Conclusion
This Pakistan Tobacco Company analysis highlights consistent top-line growth, stable margins, and strong dividend payouts despite operating in a challenging regulatory environment. With a diversified product base, cash-rich balance sheet, and pricing power, PAKT is well-positioned for sustained performance in 2025 and beyond.
Its future success will depend on how effectively it mitigates rising costs, manages compliance, and navigates the expanding illicit market. For investors, PAKT remains a reliable stock offering both value and yield.
