Engro Corporation Limited (ENGRO) is expected to announce its 1HCY23 financial result on 16th Aug’23, where we expect the company’s consolidated earnings to clock in at PKR 8,825mn (EPS: PKR 16.45 @536mn shares), up by 19% YoY. Every quarter, the company’s profitability is forecasted to arrive at PKR 4,178mn (EPS: PKR 7.79 @536mn shares) in 2QCY23 compared to a loss of PKR 558mn (LPS: PKR 1.04 @536mn shares).

On the fertiliser business front, EFERT’s bottom line clocked in at PKR 1,060mn (EPS: PKR 0.79) against a loss of PKR 98mn (LPS: PKR 0.07) in SPLY amid 44% and 6% YoY higher urea and DAP prices, respectively coupled with lower deferred tax liability adjustment during the quarter.

Meanwhile, earnings of Engro Polymer & Chemicals Limited (EPCL) arrived at PKR 1,562mn (EPS: PKR 1.72), down by 33% YoY, owed to i) lower international PVC margins, ii) higher finance costs, and iii) hike in gas prices. Whereas, Engro Powergen Qadirpur Pakistan Limited (EPQL) posted a Profit after Tax of PKR 783mn (EPS: PKR 2.42) in 2QCY23 versus PKR 255mn (EPS: PKR 0.79) during SPLY, up by 3.1x YoY owed to higher period weighting factor applied to capacity payments.

Furthermore, the net profit of Frieslandcampina Engro Pakistan Ltd (FCEPL) arrived at PKR 336mn (EPS: PKR 0.44), up by 36% YoY on the back growth in gross margins by 174bps to 13.77% given higher sales volumes. In addition to this, we expect the profitability of Elengy business to arrive at PKR 1,342mn, with an assumption of handling of ~626/mmcfd of RLNG in 2QCY23, as per our estimates. Meanwhile, the contribution from Thar business (EPTL & SECMC) during 2QCY23 is anticipated to be PKR 2,426mn.

Alongside the result, we expect the company to announce a cash dividend of PKR 9.00/share in 2QCY23 (PKR 49.00/share in 1HCY23).

Courtesy- AHL Research