JS Securities Limited – Result Review (29-07-2021)

Karachi, July 29, 2021 (PPI-OT): EFERT: EPS clocks in at Rs3.60 in 2Q2021

Engro Fertilizers Limited (EFERT) announced its 2QCY21 result today wherein the company posted after tax profit of Rs4,810mn (EPS of Rs3.6) during the quarter vis-a-vis PAT of Rs3,886mn (EPS of Rs2.9) in 2QCY20, reflecting an increment of 24% YoY. Along with the result, the company announced an interim cash dividend of Rs4.0/share, continuation of consistent payouts in future is a question mark or atleast the payout ratio is as the company’s profitability will be impacted going forward due to its booking gas costs at regular rates. Cumulatively, 1HCY21 profit of the company now stands at Rs10,509mn (EPS: Rs7.9) against profit of Rs4,457mn (EPS: Rs3.34) in 1HCY20. As we highlighted earlier as well, improved margins on a YoY basis for the sector were expected as a result of better pricing for Urea and DAP, both. This will show up in the profitability of manufacturers across the board.

Despite the company’s revenue declining by 13%YoY in 2QCY21, mainly due to lower offtake, the Gross margin of the company depicted a 3 ppts increase whereas the EPS showed a significant 24% increase on a YoY basis, in-line with our expectations. The company has announced a corporate briefing later today and we will share the key takeaways with you from the session.

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