Fauji Fertilizer Company (FFC) is expected to post 1QCY23 unconsolidated earnings of PKR7.0bn (EPS: PKR5.53), up 35% QoQ/13% YoY. The sequential increase in profitability is due to higher Urea prices, an increase in other income amid higher interest rates and short-term investments, and a 1.5ppt QoQ increase in gross margins.

Urea volumes are expected to remain flattish, while DAP offtake is projected to surge by 68% YoY due to a lower base effect. We expect an interim cash dividend of PKR4.70/sh.

We reiterate our Buy stance on FFC (TP PKR120/sh), owing to better prospects amid pricing power and decent dividend yield.

Courtesy- Intermarket Securities Limited.