Which industries stand to benefit most from cut in SBP’s policy rate?

The decision by the State Bank of Pakistan to cut the policy rate is anticipated to have a positive impact on the earnings of several listed companies, according to a report shared by Arif Habib Limited. The rate cut is expected to benefit five key sectors in particular:

**1. Auto Sector:**
- Auto companies are expected to see an earnings per share (EPS) growth of 3.7 percent and 3.2 percent respectively.

**2. Cement Sector:**
- Key players in the cement sector are likely to experience increases in their EPS. Lower financing costs resulting from the rate cut are anticipated to boost profitability and support sectoral expansion.

**3. Textile Sector:**
- Nishat (Chunian) Limited and Nishat Mills Limited in the textile sector are projected to witness EPS growth of 12.0 percent and 3.7 percent respectively.

**4. Chemical Sector:**
- Lotte Chemical Pakistan Limited and Engro Polymer & Chemicals Limited in the chemical sector are expected to see an EPS increase of 1.8 percent and 1.6 percent respectively.

However, the rate cut may present challenges for commercial banks and production sectors. Several commercial banks are expected to experience declines. The reduced interest rate is likely to impact net interest income for bank stocks, while reduced returns on investments and currency volatility may affect E&P (Exploration and Production) stocks. Fertilizer stocks are also anticipated to face challenges in this scenario.