We anticipate that earnings in the Topline Fertiliser sector will increase by 52% quarter-over-quarter (QoQ) and 44% year-over-year (YoY) in the fourth quarter of 2025 (4Q2025), primarily driven by unprecedented urea offtake volumes. This period coincides with the peak fertiliser application for Rabi crops, resulting in a natural seasonal rise in urea demand compared to the third quarter of 2025 (3Q2025). Urea offtake surged by 36% QoQ and 26% YoY, reaching 2.5 million tons in 4Q2025. Conversely, DAP (Diammonium Phosphate) offtakes increased by 60% QoQ but decreased by 22% YoY to 544,000 tons in the same quarter.

Average urea prices in 4Q2025 decreased by 5% YoY and 1% QoQ, averaging Rs4,349 per bag, as companies offered discounts to reduce inventory buildups. Engro Fertilisers (EFERT) maintained a discount range of Rs350-400 per bag during this quarter, while Fauji Fertiliser Company (FFC) offered a discount range of Rs100-120 per bag.

Meanwhile, DAP prices increased by 22% YoY and 8% QoQ, averaging around Rs14,530 per bag.

Sector turnover is projected to rise by 41% QoQ but decline by 10% YoY to Rs257 million in 4Q2025. This revenue growth is attributed to the significant increase in fertiliser offtakes, which reached an all-time high of 2.526 million tons, up from 1.854 million tons in 3Q2025. As a result, cumulative urea volumes have reached 6.731 million tons, compared to 6.577 million tons in 2024, with the closing urea inventory expected to be 284,000 tons by December 2025.

Gross margins for the sector are expected to stabilise around 34.46% in 4Q2025, compared to 27.26% in 4Q2024 and 31.35% in 3Q2025. The finance cost for the sector during 4Q2025 is anticipated to decrease by 16% YoY to Rs3.1 billion, mainly due to a lower interest rate environment. The effective tax rate for the sector is projected at 39% in 4Q2025, down from 45% in 4Q2024, with a total tax expense estimate of Rs24.2 billion.

For Engro Fertilisers (EFERT), we expect consolidated earnings of Rs9.10 per share in 4Q2025, a 2.1-fold increase QoQ compared to Rs4.35 per share in 3Q2025. This revenue growth is primarily due to a 76% QoQ increase in urea offtakes, which represents an all-time high for the company, supported by an average discount of approximately Rs 400 per bag in December 2025. Year over year, we expect earnings to rise by 18%, driven mainly by a 47% recovery in urea offtakes during the Rabi season, although DAP offtakes declined by 35% YoY in 4Q2025. Along with the earnings announcement, we expect the company to declare a cash dividend of Rs 9 per share, bringing the total cash payout for 2025 to Rs 20 per share.

For Fauji Fertiliser Company (FFC), unconsolidated earnings are expected to reach Rs18.08 per share in 4Q2025, a 34% QoQ increase from Rs13.48 per share in 3Q2025. This rise in earnings is supported by a 12% QoQ increase in urea offtake during the quarter. On a YoY basis, we anticipate earnings to rise by 60% in 4Q2025, driven by an 11% increase in urea offtakes and one-off adjustments stemming from a merger.

On a consolidated basis, FFC is expected to report earnings of Rs21.19 per share, up 23% QoQ compared to Rs17.24 per share in 3Q2025, attributable to higher contributions from core operations. FFC has previously absorbed one-off charges in 2023 and 2024 related to GIDC unwinding, subsidy receivable provisions, and impairment charges on subsidiary investments, with no such losses recognised during the first nine months of 2025. Hence, any exceptional charges in 4Q2025 could significantly impact quarterly earnings. Additionally, we expect FFC to announce a cash dividend of Rs13.50 per share, bringing the total cash payout for 2025 to Rs42.00 per share. (Courtesy – Topline)