Fauji Fertilizer Company (FFC) announced its 2025 financial results today, wherein profit after tax (PAT) surged to Rs. 73.5 billion (EPS: Rs. 51.69), up 14 percent year-on-year (YoY).
The company recorded an unconsolidated quarterly profit of Rs. 15.9 billion (EPS: Rs. 11.20) in 4Q2025, up 12 percent YoY and down 17 percent QoQ.
According to Topline Securities, the 4Q2025 result came in lower than industry expectations, primarily due to lower-than-expected gross margins.
Gross margins clocked in at 25.2 percent in 4Q2025 compared to 25.9 percent in 4Q2024 and 30.8 percent in 3Q2025, below industry expectations. The decline in gross margins is due to an Rs. 8–9 billion impairment booked on sales tax receivables, as per our channel checks.
Other income stood at Rs. 5.4 billion, down 21 percent YoY and 14 percent QoQ in 4Q2025. The quarterly decline in other income is attributed to the absence of dividend income from energy businesses. Cumulatively, other income clocked in at Rs. 39.8 billion, up 13 percent YoY.
Net sales increased 18 percent QoQ and remained flat on a YoY basis at Rs. 149.7 billion in 4Q2025, driven by higher offtakes as urea recorded an all-time high monthly sale in December. Cumulatively, sales reached Rs. 432 billion, up 169 percent in 2025.
Distribution expenses declined 14 percent YoY and increased 4 percent QoQ to Rs. 8.9 billion in 4Q2025.
Finance cost remained flat at Rs. 1.6 billion in 4Q2025, taking the total finance cost to Rs. 6.5 billion for 2025.
Tax expense stood at Rs. 13.8 billion (effective tax rate: 47 percent) in 4Q2025 versus Rs. 13.5 billion (effective tax rate: 49 percent) in 4Q2024.
Along with the results, the company also declared an annual cash dividend of Rs. 8.50 per share, lower than industry expectations. This takes the 2025 cash dividend to Rs. 37 per share (payout ratio: 72 percent in 2025 versus 80 percent in 2024).
The stock is currently trading at a 2026E P/E of 10.8x with a dividend yield of 7 percent.
So why aren’t they paying taxes ?