We anticipate Fauji Fertilizer Bin Qasim Limited (FFBL) to report a net profit of PKR 4,243mn (EPS: PKR 3.29) in 1QCY24 against a loss of PKR 5,429mn (LPS: PKR 4.20) in 1QCY23 which is primarily due to the absence of hefty exchange of PKR 4,620mn booked in 1QCY23. The company’s topline registered a growth of 50% YoY on account of i) 26% YoY growth in DAP sales, and ii) higher urea and DAP prices. Meanwhile, urea sales declined by 16% YoY during the period.

Gross margins are expected to be 23.8% during 1QCY24 vis-à-vis 7.1% in 1QCY23 owed to a decline in phosphoric acid prices. Furthermore, financial charges are expected to reduce by 29% YoY amid lower short-term borrowings. Other income is estimated to ascend by 5x YoY because of higher income from cash and cash equivalents tagged with a dividend income from subsidiaries and associates (AKBL). On a sequential basis, the company’s earnings are expected to increase by 5% QoQ on the back of i) higher urea prices and ii) surge in other income amid higher dividend income.

Courtesy – AHL Research