Fatima Fertilizer Company Ltd. (FATIMA) announced its 3QCY25 financial results, reporting consolidated earnings of PkR12.0bn (EPS: PkR5.7), up 30%YoY. Earnings came in higher than expected, mainly due to stronger-than-anticipated other income, according to a report from AKD Research.
· Revenue clocked in at PkR62.9bn from PkR62.6bn in SPLY, flat YoY, where the impact of 8%/64% YoY increase in urea and CAN sales is offset by 9%/77% decline in NP and DAP offtakes, respectively.
· Gross margins improved to 35.3% from 33.7% in SPLY, primarily driven by lower Phosrock input cost and higher sales from the base plant (beneficiary of cheap gas).
· Other income clocked in at PkR7.0bn, up 3.4x YoY, driven by 3.6x YoY increase in cash & investments.
· Finance cost inclined by 2.1x YoY to PkR2.0bn from PkR1.0bn in SPLY, mainly due to 3.9x YoY increase in total borrowings, though partially offset by declining financing rates.
· Effective tax rate during the quarter stood at 35%, compared to 38% in SPLY and 39% in 2QCY25, due to a higher contribution from other income.
· This bring 9MCY25 profitability to PkR28.9bn (EPS: PkR13.8), an increase of 27%YoY from PkR22.8bn (EPS: PkR10.8) in SPLY.
· We maintain ‘Neutral’ stance on FATIMA with a Jun’26 target price of PkR125/sh, as the benefits from lower input cost, including cheaper gas for base plant and easing Phosrock prices, are largely priced-in. However, potential developments on the Natural Resources Ltd. (NRL) front, sustained softness in Phosrock prices, and allocation of Pak-Arab gas from Mari field remain key upside risks to our valuation.
