Engro Fertilizers Limited (EFERT) - April 2023

Engro Fertilizers Limited (EFERT) – April 2023

Research Team

Table of Contents

Corporate Briefing Notes

Engro Fertilizers Limited (EFERT) held its corporate briefing session today to discuss its financial results for 1QCY23 and to highlight its future outlook.

Key Highlights

● To recall, the company posted an unconsolidated profit after Tax of PKR4.4bn (EPS: PKR3.3/sh) in 1QCY23, compared to PKR5.5bn (EPS: PKR4.13/sh) in SPLY, down by 20% YoY. The decline is attributed to higher gas prices followed by increased packaging and transportation costs.
● The company also announced a cash dividend of PKR 3.50/share during the period.
● During 1QCY23, company’s urea sales clocked in at 551K tons compared to 549K tons in SPLY. However, the urea production remained in line at 577 KT, despite 5-day outage at company’s base plant. Whereas, industry urea sales declined by a negligible amount of 1% YoY to 1,620K tons in said period.
● The management shared that the company sustained urea market share to 34% during the quarter, while DAP market share dipped to 20% compared to 25% in SPLY.
● As per company, the local urea prices are currently trading at PKR 2,994/bag, offering 48% discount as compared to international prices.
● EFERT increased urea prices by PKR554/bag, effective from Mar 31, 2023 to mitigate the impact of rise in gas prices.
● Commenting on concessionary gas case, the company informed that there is no progress as yet and it has still stay order from Sindh High Court.
● The company’s sales tax refund has booked at PKR 12.2bn by Mar’23. Whereas, subsidy receivable stands at PKR 6.5bn.
● Regarding gas pressure enhancement facility at Mari, the management shared that the project is on track and while Phase-I is expected to come online by 3QCY23.

Future Outlook

● Going-forward, the management is optimistic about demand in upcoming years on the back of better affordability of farmers to afford urea coupled with higher support prices of crops and improved availability of water. The company expects total urea demand of 6.6mn ton and DAP of 1.3mn ton in CY23.

Important Disclosures


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Analyst certification:

The research analyst for this report certifies that 1.all of the views expressed in this report accurately reflect her personal views about the subject and 2.no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst in this report.

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