Pakistan Urea sales in May-2023 are expected to clock in at 459k tons, up 10% YoY compared to 418k tons in May-2022. Number is expected to be up by 12% MoM, compared to 408k tons of Apr-2023, due to seasonal factors.

Amongst the companies, Engro Fertilizers (EFERT) is likely to record offtake of 117k tons which is a decline of 23% YoY and 26% MoM.

Fauji Fertilizer Company (FFC) is expected to record sales of 189k tons, followed by 73k tons of Fatima Group (FATIMA) and Fauji Fertilizers Bin Qasim (FFBL) of 53k tons in May-2023. Imported Urea offtakes is expected to be around 27k tons in May-2023 vs 24k tons in Apr-2023.

This will take closing inventory of Urea to 160k tons in May-2023 vs. 242k tons in Apr-2023.

Total DAP sales during May-2023 are anticipated to clock in at around 64k tons, down 32% YoY. The same is expected to be up 26% MoM due to seasonal factors.

Company wise data suggests, FFBL and EFERT are likely to record sales of 41k tons and 13k tons respectively, followed by FFC’s sales of 7k tons.

DAP production remained consistent during May-2023 as FFBL’s DAP plant retained normal production despite in-house power supply issues. This will take closing inventory of DAP to around 281k tons in May-2023 compared to 285k tons in Apr-2023.

We continue to have an ‘Overweight’ stance on Fertilizer sector with EFERT and FFC as our preferred picks due to high dividend yield and ability to pass any cost pressures.

Courtesy – Topline Securities