Fatima Fertilizer raised target price up to Rs.80

Fatima Fertilizer Company Limited Target Price Raised to PKR 80 per Share

Insight Research has just released an update on its coverage of Fatima Fertilizer Company Limited (FATIMA) stock. The research house has raised its Dec 24 target price to Rs. 80 per share.

Here are the key points from the report:

Strong Revenue Growth and Earnings Momentum

Fatima Fertilizer Company Limited, with its significant fertilizer manufacturing capacity of 2.57 million tons, has reported robust revenue growth. Over the past twelve months (TTM), Fatima’s revenue increased to PKR 263 billion compared to PKR 168 billion in the same period last year, marking a substantial 56% year-on-year increase. The company has achieved an impressive 5-year compound annual growth rate (CAGR) of approximately 37%. This growth is largely attributed to the recent surge in fertilizer prices.

Positive Market Performance and Investment Recommendation

The fertilizer sector has gained significant attention due to the surge in prices, with the ISL fertilizer universe seeing an average total return of 116% year-to-date (FYTD). Despite historically lagging behind its peers, Fatima has delivered a noteworthy total return of 98% FYTD, aligning more closely with other leading fertilizer companies.

Insight Research recommends a ‘BUY‘ stance on FATIMA with a target price of PKR 80 per share by June 2025, offering a potential upside of 53%. This recommendation is supported by Fatima’s strong earnings momentum, improved gas availability, and stable dividend payouts.

Financial Performance and Valuation

Key financial metrics position Fatima competitively within the sector. The company’s trailing twelve months (TTM) price-to-earnings (P/E) ratio stands at 4.01x, presenting an attractive valuation compared to its peers EFERT (6.35x) and FFC (5.73x). Moreover, Fatima boasts a healthy dividend yield of 18% for CY24.

Gas Supply and Price Anomaly

Fatima is well-positioned to benefit from improved gas availability and recent price anomalies. Despite gas price hikes limited to certain networks, Fatima stands to benefit from higher urea prices until price unification occurs across all networks.

Investment and Diversification Strategy

Fatima is investing strategically for future growth. The company, along with other fertilizer manufacturers, is collaborating on a project to enhance gas pressure supply. Additionally, recent shareholder approvals for investments in RIET and NRL demonstrate a focus on portfolio diversification and potential mining opportunities.

Fertilizer Sector Snapshot

Here’s a snapshot of the fertilizer sector’s key players:

Company	Capacity (tons)	CY’23 Dispatches	Utilization Level
FFBL	1,201,100	1,182,332	60.94%
FFC	2,048,000	2,610,922	123.09%
EFERT	2,375,000	2,736,528	101.66%
FATIMA	2,572,400	2,865,102	94.32%
AGL	433,125	286,856	67.48%

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Disclaimer:

The information in this article is based on research by Insight Research. All efforts have been made to ensure the data represented in this article is as per the research report. This report should not be considered investment advice. Readers are encouraged to consult a qualified financial advisor before making any investment decisions.