Urea Sales Likely to Rise by 28% on Monthly Basis

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As per provisional data, urea sales in July 2022 are expected to clock in at 551,000 tons, down 4 percent year-on-year (YoY) but up 28 percent month-on-month (MoM) due to the Rabi season.

According to a report by Topline Securities, the closing inventory of urea will likely be around 354,000 tons in November compared to 449,000 tons in the previous month. Sales for January-November 2022 are expected to clock in at 5.75 million tons, flat YoY.

Amongst the companies, Engro Fertilizers (EFERT) is likely to record an offtake of 96,000 tons down 52 percent YoY and 1 percent MoM due to the closure of its base plant for scheduled maintenance and tripping of the EnVen plant in November.

Fauji Fertilizer Company (FFC) is expected to record sales of 219,000 tons, followed by 142,000 tons of Fatima Group and 55,000 tons of Fauji Fertilizers Bin Qasim (FFBL).

Commodity-wise sales breakdown suggests total Diammonium phosphate (DAP) offtake is expected to be around 232,000 tons, up 6 percent YoY and 22 percent MoM. The report says DAP sales are up 225 percent primarily due to the start of the Rabi season. This takes 11MCY22 DAP sales to 1,042,000 tons, down 41 percent YoY.

Company-wise data suggests that FFBL and EFERT are likely to record sales of 122,000 tons and 51,000 tons respectively, followed by FFC’s sales of 20,000 tons.

The report has determined an overweight stance on the fertilizer sector with EFERT and FFC as preferred picks owing to high dividend yield and ability to pass cost pressures.

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