In June 2025, urea offtakes grew significantly, rising 21% YoY and 39% MoM to approximately 582K MT, though cumulative offtakes for the year fell 23% YoY to 2.4 million MT. This spike was likely driven by pent-up demand and pre-budget buying, anticipating a rise in Federal Excise Duty that ultimately did not happen.

Despite this boost, we predict a normalization in fertilizer consumption in the coming months due to reduced acreage for key Kharif crops (Cotton: -2.6% YoY, Rice: -5.4% YoY), forecasting a 7.5% YoY decline in urea offtakes to 6.1 million MT for CY25.

Highlights:

FFC: Fauji Fertilizer’s urea sales rose 4% YoY to 269K MT, with a market share of 46%. DAP offtakes fell 11% YoY to 77K MT, with a market share of 67%.

EFERT: Engro Fertilizer’s urea sales jumped 34% YoY to 208K MT, benefiting from last year’s plant turnaround. Its DAP sales, however, dropped 62% YoY to 12K MT.

Inventory: Urea stocks increased slightly to 1.28 million MT, with EFERT and FFC comprising 42% and 26% of total stocks, respectively.

The growth in June appears to be a temporary phenomenon, with ongoing pressures expected throughout the year. Allowing urea exports could support the sector, particularly benefiting EFERT. We maintain a Buy rating for FFC with a target price of PKR462 and a CY25 dividend yield of 10.4%. 

Source: IMS Research