{"id":7468,"date":"2025-02-12T13:21:22","date_gmt":"2025-02-12T08:21:22","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=7468"},"modified":"2025-02-12T13:22:18","modified_gmt":"2025-02-12T08:22:18","slug":"taking-a-look-at-engro-fertilizers-efert-earnings","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/taking-a-look-at-engro-fertilizers-efert-earnings\/","title":{"rendered":"Taking a look at Engro Fertilizers (EFERT) earnings"},"content":{"rendered":"\n<h2 class=\"wp-block-heading\">Key takeaways<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Engro Fertilizers (<a href=\"https:\/\/ksestocks.com\/blog\/tag\/efert\/\" target=\"_blank\" rel=\"noopener\" title=\"EFERT\">EFERT<\/a>) reported 4QCY24 earnings of PKR 10.3bn (EPS: PKR 7.7), an 8% YoY decline<\/strong> due to higher distribution costs and lower other income.<\/li>\n\n\n\n<li><strong>Full-year CY24 earnings rose 8% YoY to PKR 28.3bn (EPS: PKR 21.2)<\/strong>, supported by higher urea prices and demand.<\/li>\n\n\n\n<li><strong>Gross margins fell to 34.9% from 38.7% YoY<\/strong>, as a <strong>56% increase in gas prices<\/strong> outpaced the rise in selling prices.<\/li>\n\n\n\n<li><strong>Selling &amp; distribution expenses surged 100% YoY to PKR 9.8bn<\/strong>, while finance costs jumped <strong>5.4x YoY to PKR 1.5bn<\/strong> due to higher outstanding debt.<\/li>\n\n\n\n<li>The final dividend was declared at <strong>PKR 8.0 per share<\/strong>, bringing the total CY24 payout to <strong>PKR 21.5 per share<\/strong>.<\/li>\n\n\n\n<li><strong>AKD Securities maintains a &#8216;BUY&#8217; stance with a target price of PKR 242 per share<\/strong>, citing stable fertilizer demand and expected market share growth.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">EFERT\u2019s 4QCY24 performance: profitability pressured by rising costs<\/h2>\n\n\n\n<p>Engro Fertilizers (EFERT) posted <strong>4QCY24 consolidated earnings of PKR 10.3bn (EPS: PKR 7.7)<\/strong>, reflecting an <strong>8% YoY decline<\/strong>. While revenue grew <strong>13% YoY to PKR 84.8bn<\/strong>, the drop in earnings was primarily due to <strong>higher distribution expenses and lower other income<\/strong>.<\/p>\n\n\n\n<p>On an annual basis, <strong>EFERT recorded a profit of PKR 28.3bn (EPS: PKR 21.2), up 8% YoY<\/strong>, supported by <strong>a 17% rise in urea offtakes and a 24% increase in urea prices<\/strong>. However, declining sales in DAP (-5% YoY) and NP (-74% YoY) offset some of the gains.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Rising costs impact margins<\/h2>\n\n\n\n<p>Gross margins contracted from <strong>38.7% in 4QCY23 to 34.9% in 4QCY24<\/strong>, as a <strong>56% increase in input gas prices<\/strong> outpaced selling price adjustments. This pressure on margins, combined with a sharp rise in operating costs, weighed on overall profitability.<\/p>\n\n\n\n<p>Selling and distribution expenses <strong>doubled YoY to PKR 9.8bn<\/strong>, reflecting increased urea sales. However, the sharp rise exceeded expectations, likely due to <strong>the reclassification of expenses<\/strong>, though further clarification from management is awaited.<\/p>\n\n\n\n<p>Additionally, <strong>other income dropped 72% YoY to PKR 511mn<\/strong>, mainly due to an <strong>82% decline in short-term investments<\/strong>. Finance costs also surged <strong>5.4x YoY to PKR 1.5bn<\/strong>, driven by a <strong>5.2x increase in outstanding debt<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">The dividend payout remains strong<\/h2>\n\n\n\n<p>Despite cost pressures, EFERT continues to deliver <strong>high dividend payouts<\/strong>, declaring a final <strong>cash dividend of PKR 8.0 per share<\/strong>, bringing the full-year <strong>CY24 dividend to PKR 21.5 per share<\/strong>. This reflects the company&#8217;s <strong>strong cash generation ability and commitment to shareholder returns<\/strong>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">Investment outlook: why EFERT remains a strong bet<\/h2>\n\n\n\n<p>AKD Securities maintains a <strong>&#8216;BUY&#8217; rating on EFERT with a December 2025 target price of PKR 242 per share<\/strong>, backed by:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Stable fertilizer demand<\/strong> and <strong>rising adoption of high-margin specialty fertilizers<\/strong>.<\/li>\n\n\n\n<li><strong>Expected recovery in market share<\/strong> as the company strengthens its distribution strategy.<\/li>\n\n\n\n<li><strong>Continued high dividend payouts<\/strong>, with an estimated <strong>CY25 dividend yield of 11.8%<\/strong>.<\/li>\n<\/ul>\n\n\n\n<p>Engro Fertilizers (EFERT) faces short-term profitability pressures due to rising gas prices and higher distribution costs. However, <strong>strong urea demand, higher pricing, and a solid dividend policy continue to support long-term growth prospects<\/strong>. With <strong>positive fundamentals and an attractive valuation<\/strong>, EFERT remains a <strong>compelling investment opportunity<\/strong> in Pakistan\u2019s fertilizer sector.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What are the analysts saying?<\/h2>\n\n\n\n<p>According to our database, <strong>EFERT <\/strong>has an average analyst price target for Dec 2025 of <strong>Rs. 230<\/strong> based on estimates of 10 different analysts. This includes the highest price target of <strong>Rs. 249 <\/strong>by Pearl Global Securities and the lowest price target of <strong>Rs. 198 <\/strong>by AHL. <\/p>\n\n\n\n<p>The average analyst price target of <strong>Rs. 230<\/strong> implies an upside of<strong> 5.9%<\/strong> from here on. The expected dividend of the company is <strong>Rs. 25<\/strong> in the next year which corresponds to a dividend yield of <strong>11.5%<\/strong>. As a consistent dividend payer company EFERT can be considered a valuable investment opportunity. <\/p>\n\n\n\n<p>Here is how different research firms have set their target prices for Dec 2025:<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><thead><tr><th>Research Firm<\/th><th>Dec 25 target price (Rs.)<\/th><\/tr><\/thead><tbody><tr><td>AKD Securities<\/td><td>242 <\/td><\/tr><tr><td>AHL <\/td><td>198<\/td><\/tr><tr><td>IGI <\/td><td>243 <\/td><\/tr><tr><td>JS Global <\/td><td>240 <\/td><\/tr><tr><td>Inter Market Securities <\/td><td>220 <\/td><\/tr><tr><td>Taurus Securities<\/td><td>232 <\/td><\/tr><tr><td>Foundation Securities <\/td><td>223 <\/td><\/tr><tr><td>Insight Securities <\/td><td>221 <\/td><\/tr><tr><td>Pearl Securities <\/td><td>249 <\/td><\/tr><tr><td>Ismail Iqbal Securities <\/td><td>234 <\/td><\/tr><\/tbody><\/table><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Engro Fertilizers (EFERT) posted 4QCY24 consolidated earnings of PKR 10.3bn (EPS: PKR 7.7), reflecting an 8% YoY decline. While revenue grew 13% YoY to PKR 84.8bn, the drop in earnings was primarily due to higher distribution expenses and lower other income.<\/p>\n","protected":false},"author":9252,"featured_media":6660,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[154,138],"tags":[27],"class_list":["post-7468","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-financials","tag-efert"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/EFERT-STOCK-PSX-1140x445.png",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/EFERT-STOCK-PSX-463x348.png",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/EFERT-STOCK-PSX-300x188.png",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2024\/11\/EFERT-STOCK-PSX.png",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/7468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/9252"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=7468"}],"version-history":[{"count":0,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/7468\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/6660"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=7468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=7468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=7468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}