Fatima Fertilizer Company Limited (FATIMA) reported consolidated earnings of Rs9.5 billion (EPS: Rs4.5) during the third quarter ended September 2026, down 21% year-on-year, but ahead of market expectations owing to higher gross margins and smaller-than-anticipated losses on its equity portfolio, according to a research note issued by AKD Securities Limited.

The brokerage house noted that the company’s net sales rose 2% year-on-year to Rs63.9 billion, supported by a 15% increase in urea offtake, a 3% rise in CAN sales, and improved product prices. However, a 50% decline in NP fertilizer offtake partially offset growth.

According to the research report, gross margins improved significantly to 43.2% from 35.4% in the corresponding period last year, driven by stronger sales volumes and a higher contribution from nitrogen-based nutrients. Operating expenses increased 17% year-on-year to Rs8.3 billion due to higher distribution and administrative costs, particularly amid rising petroleum prices and increased fertilizer dispatches.

The report highlighted that other income turned into a Rs59 million loss against a Rs7.0 billion profit in the same quarter last year, largely due to negative returns on equity investments. Meanwhile, finance costs declined 24% year-on-year to Rs1.5 billion as average borrowings fell by 18%.

AKD Securities maintained its “Buy” recommendation on FATIMA with a December 2026 target price of Rs175 per share. The research house expects earnings growth to be supported by a recovery in nutrient offtakes, lower gas prices for the base plant, and increasing investments in the mining, exploration and production, and aviation sectors.