Engro Fertilizer Limited (EFERT) is scheduled to announce the financial result 1QCY24 on 18th Apr’24. We expect the company to post a profit after tax of PKR 7,276mn (EPS: PKR 5.45) compared to PKR 4,404mn (EPS: PKR 3.30) in 1QCY23, showing a hefty jump of 65% YoY.

Net sales are projected to grow by 52% YoY to PKR 66,898mn during 1QCY24 amid i) a surge in urea and DAP prices by 66% and 22% YoY, respectively, and ii) massive growth in DAP sales. Meanwhile, urea offtake plummeted by 6% YoY. Gross margins are expected to settle at 29.51% during 1QCY24 vis-à-vis 24.49% in SPLY owed to higher urea prices. It is pertinent to note that during the quarter, OGRA revised gas prices for consumers on SNGP and SSGC, impact of which was passed on via hike in urea prices.

Furthermore, financial charges are forecasted to decline by 19% YoY to PKR 353mn, given the fall in short-term borrowings. Other income is projected to jump up by 2x YoY to PKR 1,537mn, owing to higher income from cash and cash balances. On a sequential basis, the profitability is expected to plummet by 35% QoQ on the back of i) a reduction in urea and DAP sales by 14% and 29% QoQ, respectively. In addition to the result, we expect the company to announce a PKR 5.00/share dividend in 1QCY24 (PKR 3.50/share in 1QCY23).

Courtesy – AHL Research