What to expect from Fauji Fertilizer Company (FFC) post FFBL merger?

Al-Habib Capital Markets just published a report on Fauji Fertilizer Company (FFC). The research firm has a Dec 25 price target of Rs. 456 on the stock. During CY2025, FFC is expected to report an EPS of Rs. 54.42 and payout a dividend of Rs. 41 in the full year.

The stock is up 222% in the last year, significantly outperforming the KSE100 index’s returns of 77% during the same period.

Fauji Fertilizer Company (FFC) is one of the largest players in Pakistan’s fertilizer industry and has now merged with FFBL increasing its market share to 46% for urea and the only local manufacturer of DAP. This merger has created cost-savings and increased interest in strategic units.

It is also diversifying its operation by acquiring a 74% equity stake in Agritech Limited, which will enhance FFC urea market dominance to 48%.

As reflected by high gross margins, the company boasts of an efficient feedstock and fuel gas pricing that gives FFC a major cost edge. Expected earnings of the company are to increase, this is due to high core margins, and dividends from its investments.

Attractive valuations, favorable ‘earnings visibility’ rating, and FFC’s market control suggest that it has the potential to increase from current levels considerably.

FFC enjoys a cost advantage due to favorable feedstock and fuel gas pricing, leading to strong gross margins. The company’s earnings are expected to grow, supported by strong core margins and dividend income from strategic investments.

According to our database, FFC has an average analyst price target for Dec 2025 of PKR465 based on estimates of 6 different analysts. This includes the highest price target of PKR583 by AKD Securities and the lowest price target of PKR362 by Arif Habib Limited.

The average analyst price target of PKR465 implies an upside of 21.7% from here on. The stock’s dividend yield is expected to stay at around 10.5% for 2025 based on current levels.