Engro Fertilizer (EFERT) is expected to post 2Q net profit of PKR5.0bn (EPS: PKR3.81), up 31% yoy. Intermarket Securities Limited ascertained this in a research report.

Analyst expects that despite the decline in Urea and DAP offtake by 17%/44% yoy basis, (i) higher prices of both fertilizers, (ii) increase in volumes of other fertilizer products, and (iii) expected decline in finance cost will increase the profitability of the company. Additionally, gross margins will increase by about 4ppt yoy to c.39%.

The research house also expects EFERT to announce an interim cash dividend of PKR3.75/sh. We have a Neutral stance on EFERT (TP PKR75/sh), where analyst flags a CY21f DY of 16% (12% in CY22f).