Engro Polymer & Chemicals Limited organised analyst briefing. AHL Research has published a report on it. The management of Engro Polymer Chemical Limited (EPCL) held an analyst briefing session on 31st Oct’25 to discuss the 9MCY25 financial result and future outlook.
Brief Takeaways
- EPCL reported a loss after tax (LAT) of PKR 3,452mn (LPS: PKR 3.80/share). Revenue grew by 6% YoY to approximately PKR 57.6bn compared to PKR 54.5bn in the same period last year, supported by an improvement in gross profit. However, the overall loss and LPS increased due to the impact of taxation, as tax reversals were recorded in the corresponding period of the previous year, thus LAT rose by 51% YoY.
- In 3QCY25, the company recorded a reversal of PKR 400mn related to the gas levy provision booked in 2QCY25, which positively impacted margins. The reversal was driven by the actualization of the gas levy at a rate lower than the initially notified PKR 791/MMBtu in 2QCY25; however, the company expects to procure gas at the higher notified levy of PKR 791/MMBtu in the upcoming quarter.
- The company achieved its highest-ever nine-month sales, primarily driven by strong domestic PVC demand maintaining an 85–87% market share and benefiting from solid construction sector activity. PVC remained the core revenue contributor, and margins expected to recover as ethylene prices continue to soften; ethylene declined QoQ from USD 823/ton to USD 825/ton, leading to an improvement in the core delta from USD 275/ton to USD 335/ton, though global PVC prices remain range-bound.
- Caustic soda performance remained steady with stable pricing, but regional oversupply from China and Southeast Asia exerted margin pressure, while the domestic gas levy continued to weigh more heavily on this segment due to high captive gas usage.
- Hydrogen Peroxide (HPO) operations further stabilized with growing market share despite competitive pressure from low-cost imports from Bangladesh, and the company initiated smaller export volumes to diversify its sales base.
- The gas levy, initially notified at Rs.791/MMBtu, was actualized monthly by OGRA in the Rs.238–578/MMBtu range and applied with a time lag, prompting continued engagement with authorities for greater transparency and predictability in pricing.
- To mitigate rising energy costs, the company is evaluating multiple alternate energy options, including solar, coal, grid, and hybrid solutions, with a comprehensive long-term energy strategy expected to be finalized by end-2025 or early-2026 to ensure competitiveness and operational reliability.
Thanks & Regards
AHL Research
