Revising Target Price to PKR 88.00, Adopting Positive Stance
Engro Fertilizers Limited (EFERT) registered consolidated earnings of PKR 3,260m (EPS: PKR 2.44) for 2QCY18. Alongside results, the company also announced an interim dividend of PKR 4.00/share. The company’s earnings in 2QCY18 improved by 31.96% YoY despite lower volumetric sales of Urea due to higher selling prices and lower finance costs. We have revised our assumptions for upcoming period after incorporating i) company’s latest financials, ii) a recent increase in Urea and DAP prices, iii) increase in gas prices, and iv) PKR devaluation against USD. Our revised target price for June 2019 is PKR 88.00/share (previous target price for December 2018 was PKR 83.00/share), which offers an upside of 15.42% from the stock’s last closing price; hence, we are adopting a positive stance on the scrip.
Engro Fertilizers Limited is a Pakistan-based company, which is engaged in manufacturing, purchasing and marketing of fertilizers. The Company's brands include Engro Urea, Engro NP, Engro DAP, Zingro, Engro MOP, Engro SSP and Engro Zarkhez. Engro NP is the Company's fertilizer brand with Nitrogen and Phosphorous content in equal quantity. Engro DAP primarily contains Di-Ammonium Phosphate, and is imported by Engro EXIMP and marketed by the Company. Engro DAP is marketed in approximately 50 kilogram bags. Zingro is a micronutrient fertilizer, and is imported by Engro EXIMP and marketed by the Company. Engro Zarkhez has Nitrogen, Phosphorous and Potassium, and is primarily offered for sugar cane, fruit orchards, vegetables, potato and tobacco farming. Engro Envy is primarily offered to urban market for gardens, lawns, flower beds, fruit plants and ornamental plants. The Company is a subsidiary of Engro Corporation.
Ismail Iqbal Securities (Private) Limited (IISPL) is a TREC holder of the Pakistan Stock Exchange, as well as an SECP registered Underwriter and Book Runner. IISPL provides comprehensive financial services including Equity Sales, Research on Equities and the Macro-Economy, Investment Advisory, Portfolio Management, Corporate Finance, and extensive services for Private Equity investors. IISPL services a diversified client base, from Institutional to Retail Investors including High Net worth Individuals.
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