Top 5 High ROE Picks According to Topline Securities

3. Engro Fertilizers Limited (EFERT)

Expected ROE 2026: 70%

Engro Fertilizers Limited (EFERT), one of the leading players in Pakistan’s fertilizer industry, continues to offer a steady earnings outlook with strong dividend potential. Although growth expectations are modest, the company’s generous payout and consistent return profile make it a stable choice for income-focused investors.

Earnings Outlook

EFERT is expected to report an earnings per share (EPS) of PKR 20.0 in FY25 and PKR 26.1 in FY26. While earnings are projected to decline slightly in FY25 (-5%), a recovery is expected in FY26, with EPS growing 31% year-on-year.

This pattern reflects a stable underlying business, with potential for upside depending on urea pricing, gas availability, and input cost management.

Dividend Forecast

Dividend forecasts remain strong, with projected payouts of:

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• PKR 20.0 in FY25
• PKR 26.1 in FY26

These translate into attractive dividend yields of 10% and 14% respectively, based on the current market price of PKR 192. EFERT’s yield remains one of the highest among listed companies, reinforcing its appeal for yield-seeking investors.

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Valuation

EFERT trades at forward price-to-earnings (P/E) ratios of:

• 9.6x in FY25
• 7.4x in FY26

While not the cheapest in the sector, these valuations are reasonable given the consistency of cash flows and the relatively high payout.

Price-to-book (PBV) is projected at 5.3x in FY25 and 5.1x in FY26 — slightly elevated, but in line with the company’s profitability and capital return profile.

Return on Equity

Return on equity (ROE) remains strong and is forecast at:

• 55% in FY25
• 70% in FY26

These levels indicate healthy capital efficiency and support the current valuation, even in a relatively mature industry environment.

Conclusion

EFERT may not offer rapid earnings growth, but its high dividend payout and solid return profile make it an appealing option for conservative investors. With dividend yields forecast in the double digits and an expected earnings rebound in FY26, EFERT remains a steady performer in the fertilizer space.

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →