The management of Engro Fertilizer Limited (EFERT) held an Analyst Briefing session on 22nd Feb’24 to discuss the company’s performance and future outlook.

Brief Takeaways

The company’s urea market share in CY23 increased to 35% in CY23 from 29% in CY22. Meanwhile, the company’s DAP market share shrunk to 18% in CY23 vis-à-vis 23% in CY22.

To recall, the company posted a consolidated net profit of PKR 26,191mn (EPS: PKR 19.61) in CY23 compared to PKR 16,003mn (EPS: PKR 11.98) in CY22, up by 64% YoY which is on account of i) 20%, and 6% YoY growth in urea and DAP offtake, respectively, ii) jump in urea prices, and iii) 27% YoY lower finance cost.

In Dec’23, the company urea price stood at PKR 3,471/bag, trading at a 65% discount compared to the international land price of PKR 5,714/bag.

Regarding BMR/ATA, the company informed us that the EnVen Plant turnaround is scheduled for the 2nd week of Apr’24. Regarding CAPEX, the management shared that the company has already incurred the CAPEX, which was around ~USD 45mn – USD 50mn.

The management appreciated the government’s effort to increase gas prices and recommended unified prices for the entire industry. The revision in gas price is applicable from 1st Mar’24.

The management shared that the Pressure Enhancement Facility’s phase I has reached 60% completion, with completion expected towards the end of CY24. For phase II, the ordering of compressors is in progress, and the management expects the commencement of phase II of the project by the end of 2025.

The management informed that the company, along with other fertiliser players, took the initiative to support the government during the financial crunch by uplifting ~75K tons of urea at import price.

Courtesy – AHL Research