Engro Fertilizer (EFERT) is likely to announce an interim cash dividend of PKR3.0/sh in3Q

Engro Fertilizer (EFERT) is expected to post 3Q net profit of PKR4.2bn (EPS: PKR3.15), down 40% yoy. The decline is majorly due to (i) lower Urea/DAP offtake, by 7%/58% yoy; and (ii) discontinuation of concessionary feed gas for Enven plant, which was thought to last until June 2023, ended in June 2021. EFERT is in negotiations with SNGPL and has also obtained stay order from Sindh High Court.

Gross margins will come off by c.1ppt yoy to c.28%.

We also expect EFERT to announce an interim cash dividend of PKR3.0/sh.

We have a Neutral stance on EFERT (TP PKR75/sh), where we flag a CY21f DY of 20% (which, however, falls to 14% in CY22f).

Courtesy – Intermarket Securities Limited