Engro Fertilizer Limited (EFERT) is expected to disclose the financial result for 9MCY23 on 9th Oct’23, whereby we expect the company’s net profit to arrive at PKR 13,218mn (EPS: PKR 9.90), expanding by 38% YoY, which is on account of 13% YoY growth in urea offtake tagged with an increase in urea prices by 45%.

Meanwhile, DAP sales remained stable during the period. Every quarter, the profitability is expected to settle at PKR 7,754mn (EPS: PKR 5.81), depicting a mammoth jump of 85% YoY. This hefty growth is mainly attributable to a massive surge in urea and DAP sales of 63% and 58% YoY, respectively, followed by a hike in urea by 48%. Gross margins are forecasted to settle at 32.26% in 3QCY23 vis-à-vis 27.29% in SPLY higher sales volumes of urea. Furthermore, finance costs are expected to swell up by 2x YoY given higher interest rates and short-term borrowings. Other income is anticipated to grow by 36% YoY, owed to higher income from cash and cash balances. Alongside the result, we expect the company to announce a cash dividend of PKR 4.00/share (PKR 10.50/share in 9MCY23).

Courtesy – AHL Research