AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi: Engro Fertilizers Ltd. (EFERT) is grappling with significant challenges including sub-optimal farm economics and disparity in gas prices, which have led to increased discounts and a heavier debt load. Despite these hurdles, EFERT remains a strong performer in terms of dividend yield, maintaining a projected yield of 13% for the calendar year 2026.
The fertilizer sector is experiencing a slowdown in demand, causing a concerning build-up of urea inventory. EFERT’s management, in a recent corporate briefing, indicated that if current conditions persist and export permissions are not granted, urea inventory could surpass one million tons by the end of 2025. This scenario is reminiscent of 2016, when similarly high inventory levels led to export allowances.
High inventory levels are strengthening the case for permitting urea exports. Historical comparisons show an average year-end inventory of 309,000 tons over the past 15 years, excluding the anomaly of 2016. The company estimates that allowing urea exports could boost the dividend yield by up to 2% in the fourth quarter of 2025 if the government grants export permissions.
Despite the challenges, analysts maintain a positive outlook on EFERT, retaining a ‘Buy’ stance with a target price of Rs240. The company’s ability to navigate these near-term hurdles while offering attractive yields continues to position it as a top defensive stock in the market.