Fauji Fertilizer Company Ltd. (FFC) has announced that its Board of Directors, in a meeting held on June 13, 2025, approved the submission of an Expression of Interest (EOI) and prequalification documents to Privatization Commission for the potential acquisition of stakes in Pakistan International Airlines Corporation Ltd. (PIACL) and undertaking a comprehensive due diligence exercise as part of the process.

PIACL, the national flag carrier of Pakistan, holds the highest market share in the domestic aviation sector at 19% and operates a fleet of 34 aircraft. In a major restructuring effort last year, the government carved out net liabilities amounting to PKR 654 billion and non-core assets into PIA Holding Company Ltd. (Holdco of PIACL), making PIACL a debt-lite entity. Notably, PIACL was EBITDA-positive in CY24, with a reported equity value of PKR 3.6 billion as of December 24.

To recall, the Privatisation Commission had set a minimum bid price of PKR 85 billion in the previous privatisation attempt. FFC has cash and short-term investments worth PKR 147 billion on a standalone basis as of March ’25.

Investment Perspective: We have a ‘Buy’ call on FFC with a Dec’25 target price of PkR583/sh. Our liking of the scrip is based on amalgamation with FFBL to create synergies and elevated gross margins due to the continuity of cheaper gas for FFC base plants.

Courtesy – AKD Research