EFERT 4QCY23 earnings to clock in at PkR7.48/sh: EFERT’s board is scheduled to announce their 4QCY23 result today, where we expect the company to report earnings of PkR10.0bn (EPS: PkR7.48) vs. PkR9.6bn (EPS: PkR7.18) in the preceding quarter, up 4.3%QoQ. The said increase is primarily attributable to the increased gross profit and higher other income. Topline is expected to increase by 5.9%QoQ to PkR70.1bn, where the rise in urea prices largely offset the impact of 13%QoQ decline in Urea sales.

Additionally, 43%QoQ growth in DAP sales volumes also kept the topline elevated. Gross margins are likely to drop slightly to 30.7% vs. 31.7% in 3QCY23 due to a higher proportion of DAP sales, which have lower margins compared to urea. Furthermore, other income is expected to clock in at PkR1.7bn (↑125%QoQ), driven by the increased ST investments (PkR24.3bn in Sept’23 books vs. PkR2.7bn at Jun’23 end).

Moreover, financial charges are expected to decline by 4.9%QoQ amid reduction in short-term borrowings. Overall, full year earnings accumulate to PkR18.75/sh vs. PkR11.99/sh in CY22, an increase of 56.4%YoY, driven by increased sales volumes and higher retention prices.

Additionally, we expect the company to announce a final cash dividend of PkR7.5/sh, taking the full-year dividend to PkR20.0/sh.

Courtesy – AKD Research