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Karachi: Engro Fertilizers (EFERT) convened its third-quarter 2025 corporate briefing session today, during which management detailed the company’s financial performance and strategic outlook. Key topics included a reclassification of selling and distribution expenses, the launch of a new product, and ongoing discussions with the government regarding gas prices.
Management reported a year-over-year increase of 48% in selling and distribution expenses for the first nine months of 2025. This increase was attributed to higher inventory holding costs. The company noted an improvement in farmer economics, especially in the wheat, rice, and cotton sectors, highlighted by a rise in wheat prices from Rs2,600-2,800/maund in the second quarter to Rs3,500-Rs3,800/maund in the third quarter.
EFERT announced the launch of Triple Super Phosphate (TSP) in Pakistan, positioned as a cost-effective alternative to DAP. TSP offers similar phosphoric content but is priced Rs1,500-2,000 lower than DAP, providing a more affordable nutrient solution for farmers.
The briefing also covered the industry’s inventory situation, with the urea industry inventory standing at approximately 1.1 million tons in the third quarter. Management expects the industry to maintain over 1 million tons in inventory by December 2025, aided by recent decent offtakes.
Urea pricing was discussed, with current offerings ranging between Rs250-Rs300 per bag, influenced by market demand and supply. Dealer margins for the third quarter were reported at Rs225 per bag. The company’s DAP sales were limited due to lower inventory levels, resulting in a market share decline to 12% during the first nine months of 2025 compared to 21% in the same period last year.
The company has taken steps to manage its DAP inventory by securing loans by the end of the third quarter, which helped keep finance costs low relative to debt levels. Additionally, EFERT is exploring the feasibility of establishing a fertilizer plant utilizing Thar coal.
Ongoing discussions with the government on gas pricing and allocation were highlighted, with management expressing optimism that these will resolve key industry concerns. The pressure enhancement facility at the Mari field is progressing, with phase one completed and phase two now expected to finish in the fourth quarter, with no negative impact on gas pressure anticipated.
EFERT is trading at a forecasted price-to-earnings ratio of 11.2 for 2026 and offers a dividend yield of 8.5%, according to company estimates.