Engro Fertilizer Limited (EFERT) announced its 1QCY26 results, reporting a net profit of Rs. 3.3 billion (EPS: Rs. 2.49), up 14 percent year-on-year (YoY).
Alongside the results, the company declared a dividend per share (DPS) of Rs. 2.0 for 1QCY26, reflecting an 80 percent payout, lower than historical levels and down from Rs. 2.25 last year, according to Arif Habib Limited.
Net sales increased 25 percent YoY but declined 63 percent quarter-on-quarter (QoQ), driven mainly by a sharp 73 percent QoQ fall in urea offtake. This follows an exceptionally strong Dec’25 quarter, when EFERT recorded its highest-ever quarterly urea sales of 1.03 million tons, leading to elevated dealer inventories due to strong Rabi demand and softer demand in the current quarter.
EFERT had already reduced discounts from Rs. 400 per bag to Rs. 150 per bag in Jan 2026 and fully withdrew them from 4 April 2026, resulting in a decline in market share to 26.9 percent (vs. 40.9 percent in Dec’25 and 23.6 percent in Dec’24). Meanwhile, DAP offtake rose 62.3 percent YoY to 40 thousand tons.
Distribution costs increased slightly by 1 percent YoY to Rs. 3.3 billion in 1QCY26. Finance costs rose 31 percent YoY, mainly due to PEF-related capex financing and higher inventory levels, despite lower interest rates.
Cash and short-term investments declined to Rs. 17 billion in March 2026 (vs. Rs. 24 billion last quarter), while inventories rose to Rs. 34.2 billion (vs. Rs. 25.6 billion), reflecting weaker offtake.
The company held approximately 386 thousand tons of inventory, accounting for 48 percent of total industry stocks, marking a significant QoQ buildup. Consequently, debt levels increased 15 percent QoQ to Rs. 77 billion, compared to Rs. 67 billion in the previous quarter.
EFERT is currently trading at CY26e and CY27f price-to-earnings (P/E) multiples of 11.7x and 9.4x, respectively.