⚡ Flash Summary

Engro Fertilizers Limited (EFERT) presented its Q3 2025 results, revealing a mixed performance landscape. Macroeconomic indicators stabilized, supported by low inflation and steady exchange rates, fostering a positive outlook for FY26 with GDP growth projected at 3.6%. Farmer economics improved due to wheat price increases, and post-flood assessments indicated less severe damage than expected. However, Q3 2025 saw a decrease in revenue and profitability compared to the previous year, impacted by reduced sales volumes and urea discounts.

📌 Key Takeaways

• Macroeconomic indicators show stabilization, supporting a positive FY26 outlook with 3.6% GDP growth. 📈
• Farmer economics improved with wheat prices rising to PKR 3,500-3,800 per maund in Q3. 🌾
• Post-flood damage to cropped land was less severe than initially expected. 🌊
• Rabi water availability is projected to be above average due to heavy monsoon inflows. 💧
• Pressure on farmer input costs is expected to ease with potential subsidies. 💰
• YTD Sales for Urea were 4,205 KT compared to 4,571 KT last year. 📉
• Market Share for Urea increased slightly from 29% to 30%. 📊
• Sales for Q3 2025 Urea were 589 KT compared to 466 KT in Q3 2024. 🚀
• Urea inventory share stood at 46% in Q3 2025. 📦
• Engro Markaz sales increased by 200% in Q3 2025. 🌟
• DAP sales for Q3 2025 were only 16 KT compared to 291 KT last year. 📉
• DAP YTD Sales are 97 KT vs 778 KT last year. 📉
• EFERT launched Triple Super Phosphate (TSP) as an alternate product to DAP. 🌱
• Company contributed ~PKR 20 Bn to the National Exchequer through taxes and levies. 🏦
• Third interim dividend declared at PKR 4.5/share for Q3’25, compared to PKR 2.50/share for Q3’24. 💸

🎯 Investment Thesis

Given the reduced sales and profitability with the increased debt, a HOLD recommendation is appropriate. The price target would depend on the assumption of next year’s wheat price, which is hard to know at this time. This is a MEDIUM_TERM investment.