Engro Fertilizers Limited (EFERT) reported a net profit of PKR 9.1 billion for the third quarter ended September 2026, with earnings per share (EPS) of PKR 6.83, up 57 percent year-on-year, driven by strong fertilizer sales and a higher market share, according to AHL Research.
The company announced a cash dividend of PKR 5.50 per share alongside the results, compared with PKR 4.50 per share in the corresponding period last year. According to the brokerage house, the relatively lower 80 percent payout ratio reflects a cautious capital allocation strategy amid potential liabilities.
AHL Research noted that EFERT’s net sales surged 45 percent year-on-year and 141 percent quarter-on-quarter in 3QCY26, supported by strong fertilizer offtakes. Urea sales jumped 175 percent quarter-on-quarter to 711,000 tonnes, driven by improved inventory availability and favorable farm economics. Industry-wide disruptions from transporter strikes, along with temporary shutdowns at competing plants operated by Fatima Fertilizer, Fauji Fertilizer Company (FFC), and Agritech, further boosted EFERT’s volumes and market share.
DAP sales also showed strong momentum, rising 168.4 percent year-on-year to 37,000 tonnes during the quarter. As a result, the company posted a 35 percent gross margin.
The research house noted that EFERT gradually reduced its urea discount from PKR 400 per bag to PKR 150 per bag in January 2026 before withdrawing it completely in April, coinciding with the latest price increase.
Distribution expenses increased 33 percent year-on-year to PKR 7 billion, mainly due to higher sales volumes and elevated fuel costs. Meanwhile, finance costs rose 90 percent to PKR 2.4 billion, reflecting financing for PEF-linked capital expenditure and higher inventory levels despite lower interest rates.
On the balance sheet, inventory remained elevated at PKR 60 billion, while debt fell to PKR 83 billion from PKR 103 billion in the previous quarter. Cash and short-term investments stood at PKR 3.6 billion at the end of September 2026.
According to AHL Research, EFERT is currently trading at CY26 and CY27 forward price-to-earnings multiples of 10.6x and 8.0x, respectively, indicating attractive valuation levels relative to its earnings outlook.