Fauji Fertilizer Company Limited (FFC) reported a net profit of Rs. 17.5 billion (EPS: Rs. 12.14) in 1QCY26, up 32 percent year-on-year (YoY). The company also announced a dividend of Rs. 8.50 per share, compared to Rs. 7.0 in the same period last year.

Key Results

Net sales increased 50 percent YoY to Rs. 95.3 billion in 1QCY26, driven by higher fertilizer demand, including an 11 percent YoY rise in prilled urea offtake, a 129 percent YoY surge in DAP sales, and a 10 percent YoY increase in granular urea volumes. Market share in urea improved to 58 percent versus 49 percent in Mar CY25 and 37 percent in Dec CY25, supported by weaker demand at competitors EFERT and FATIMA and the withdrawal of Rs. 150 per bag discounts in Jan CY26.

Gross margins stood at 31.0 percent in 1QCY26, compared to 25.2 percent in the previous quarter and 35.6 percent in the same quarter last year (SPLY). The sequential decline reflects a high base effect in the prior quarter, which included Rs. 7.7 billion in sales tax-related adjustments on input costs.

Other income rose 43 percent YoY to Rs. 10.7 billion, supported by dividend income of Rs. 1.75 per share from AKBL, expected Rs. 5.1 billion from TEL, and higher investment returns. The company maintained a strong cash position of Rs. 181 billion as of March CY26.

Finance costs increased 28 percent YoY to Rs. 2.2 billion due to a higher debt level of Rs. 80 billion versus Rs. 49 billion in SPLY, partially offset by lower interest rates.

Inventory levels declined to Rs. 45 billion in 1QCY26 from a peak of Rs. 60 billion in Sep CY25, reflecting improved sales volumes over the last two quarters.

Outlook

FFC remains a Buy, with a December CY26 target price of Rs. 643 per share. The stock trades at CY26e and CY27f P/E multiples of 9.5x and 9.1x, respectively.