Rabi Season Spurs DAP Sales Surge, Eases Fertilizer Inventory Levels

Karachi: Urea offtakes in Pakistan have declined amid worsening farmer incomes, while diammonium phosphate (DAP) sales have surged by 95% year-over-year, driven by the start of the Rabi season. This development is expected to alleviate inventory pressures within the fertilizer sector.

According to AKD Securities Limited, Fauji Fertilizer Company (FFC) and Engro Fertilizers (EFERT) reported significant declines in urea sales. FFC’s urea sales decreased by 12% year-over-year in August 2024, while EFERT experienced a 42% drop, attributed to a disparity in pricing. Despite these challenges, companies on the Mari gas network, including FFC and FATIMA, continue to benefit from a 53% reduction in gas prices compared to last year.

The analysis maintains an overweight stance on the fertilizer sector, citing a stable earnings outlook and higher dividend yields. FFC and FATIMA remain the preferred choices within the sector, as the current market dynamics provide a favorable environment for these entities amid fluctuating sales.

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