Engro Holdings (ENGROH) held a Corporate Briefing today, and the key Takeaways reported below:
Regarding the expiry of the Vopak terminal business in mid-2025, management stated that it has actively started talks with the government to reach good conclusions in the company’s best interest.
Divestment of thermal Assets is in progress and subject to the lenders’ approval.
EFERT achieved revenue growth of 15% YoY to Rs256bn in 2024 due to higher prices and volumes from DAP and specialty fertilizers. Urea volumes decreased by 17% YoY to 855K tons amid a plant turnaround of almost 55 days. The management foresees the demand for specialty fertilizers remaining under pressure due to deteriorating farm economics.
EPCL booked a loss during the period as it is more inclined towards the commodity cycle. The higher volume of imported PVC, high energy costs, muted construction activities, and increased finance costs, kept the business under pressure. The management highlighted that domestic PVC demand shows a recovery backed by lower interest rates and stabilizing inflation.
Engro Elengy & Vopak experienced a 30% YoY increase in chemical handling due to the ease of LC opening in 2024. The company handled 72 cargos, with availability over 97%. Profitability remained strong despite dollar-denominated earnings.
Engro Enfrashare expanded its tower footprint to 4,215 towers by adding 263 towers in 2024, which helped the company capture a 52% market share in the ITC market. The tenancy ratio improved to 1.26x in 2024 vs. 1.21x in 2023. Given the stable cash flow business, the management is optimistic about acquiring the tower assets, i.e., 10,617 towers from Pakistan Mobile Communications. However, the company sees no threat from satellite companies in coming years.
§ EPQL’s profitability decreased by 15% YoY to Rs2.1bn in 2024, due to provision against possibility of potential alteration in its power purchase agreement.
§ Engro Eximp FZE witnessed revenue growth of 26% YoY in 2024, given its strong focus on securing third-party trades. The company successfully secured the first-ever 3P DAP cargo in Pakistan. Moreover, the 3P ratio improved to 24% in 2024 vs. 14% last year.
§ FCEPL’s topline increased to Rs107bn, up 7% YoY, whereas profit increased by 46% during the period mainly due to expanded retail presence by improving supply chain efficiency and stable volumes. The recent imposition of sales tax on packaged milk have impacted the conversion ratio of the company. Moreover, divestment of Engro Eximp Agri products is in progress.
§ To recall, ENGROH reported earnings of Rs9.9bn (EPS: Rs20.48) down 5% YoY in 2024 due to lower dividend announced by Engro Corporation in 2024. Portfolio investments comprise 48% Banks, 27% E&Ps, and 14% IT.
§ Whereas, Engro Corporation’s consolidated profitability witnessed a growth of 7% YoY to Rs21bn (EPS: Rs38.57), due to higher contribution from fertilizer business.
§ ENGROH is currently trading at a 2025E P/E of 7.9x and dividend yield of 18.5%.
Courtesy – Topline Pakistan Research
