The meeting of the board directors of Engro Fertilizer Company Limited (EFERT) is scheduled to be taken place on 9th February, 2015.
Earnings likely to increase by 45%
On back of higher volumetric sales of Urea along with likely increase in other income and lower finance cost, Engro Fertilizer is expected to earn a profit after taxation (PAT) of Rs 7.96 billion (EPS: Rs 6.13) in CY14 versus Rs 5.49 billion (EPS: Rs 4.24) in CY13. In 4QFY14 alone, we anticipate 15% QoQ growth in profitability as it would surge to Rs 2.45 billion (EPS: Rs 1.89) compared to Rs 2,137 million (EPS: Rs 1.65) in 3QCY14. This would be attributed to higher sales and hike in other income. Furthermore, we expect company would announce cash dividend of Rs 1.5/share.
Sales revenue to jump 23% in CY14
Company’s net revenue likely to hike by 23% YoY to Rs 61.49 billion in CY14 against Rs 50.12 billion in CY13 on back of higher urea sales and surge in urea prices. Average urea prices increase by 4% to Rs 1,790/bag in CY14 versus Rs 1,710/bag in CY13 due to partial passing on increase in GIDC. With the support of increased availability of gas to the company, the company managed to produce more urea. As a result, urea offtake surge by 17% to 1.82 million tons in CY14 against 1.56 million tons in CY13 due to better demand.
Gross profit expected to hike
Gross profit is expected to marginally rise by 1% amounting to Rs 22.39 billion compare to Rs 22.12 billion in CY13 due to higher volumetric sales. We expect gross margins to decline by 8ppts at 36.4% in CY14 against 44.1% in CY13 due to partial increase in urea prices due to increase in GDIC.