Engro Fertilizer Limited (EFERT) announced its financial results for 1QCY26, reporting a net profit of Rs. 3.3 billion (earnings per share: Rs. 2.49), reflecting a 14 percent year-on-year (YoY) increase. The company also declared a dividend of Rs. 2.0 per share, translating into an 80 percent payout, lower than the Rs. 2.25 per share announced in the same period last year.
Net sales registered strong growth of 25 percent YoY; however, revenues declined sharply by 63 percent quarter-on-quarter (QoQ) due to a significant slowdown in urea offtake. Urea sales dropped 73 percent QoQ, largely normalizing after an unusually strong Dec’25 quarter, during which EFERT achieved record urea sales of 1.03 million tons. Elevated dealer inventories built during the Rabi season and weaker demand in the current quarter weighed on volumes.
During the period, EFERT reduced dealer discounts from Rs. 400 per bag to Rs. 150 per bag in January 2026 and completely withdrew incentives from April 4, 2026. As a result, market share declined to 26.9 percent, compared to 40.9 percent in Dec’25, though still higher than 23.6 percent recorded in Dec’24. In contrast, DAP offtake improved, increasing 62.3 percent YoY to 40 thousand tons.
Distribution expenses rose marginally by 1 percent YoY to Rs. 3.3 billion. Finance costs increased 31 percent YoY, mainly driven by financing related to PEF expansion capex and higher working capital requirements despite a relatively lower interest rate environment.
On the balance sheet side, cash and short-term investments declined to Rs. 17 billion as of March 2026, compared to Rs. 24 billion in the previous quarter. Inventories increased to Rs. 34.2 billion, up from Rs. 25.6 billion, reflecting slower product offtake. EFERT held approximately 386 thousand tons of inventory, representing nearly 48 percent of total industry stocks, indicating a notable QoQ buildup.
Consequently, total debt rose 15 percent QoQ to Rs. 77 billion, compared to Rs. 67 billion in the preceding quarter, as the company financed higher inventory levels and ongoing capital expenditure.
EFERT is currently trading at forward P/E multiples of 11.7x for CY26e and 9.4x for CY27f.
