Engro Fertilizers (EFERT) announced its 4Q2025 financial results on Thursday, wherein the company recorded consolidated quarterly profit of Rs8.4bn (EPS: Rs6.26), down 19% YoY and up 44% QoQ. The result came in below industry expectations due to lower-than-expected gross margins along with the one-time recognition of a super tax charge amounting to ~Rs2bn in 4Q2025.
This takes 2025 earnings to Rs22.6bn (EPS: Rs16.95), down 20% YoY.
Net sales increased by 20% YoY and 86% QoQ to Rs102bn in 4Q2025 due to a surge in urea and DAP offtakes.
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Gross margins stood at 27.7% in 4Q2025, below our expectation of 32.9%. We believe lower margins are mainly attributable to higher discounts offered by the company. This brings full-year 2025 margins to 30.6% compared to 28.2% in 2024.
Distribution expenses decreased by 16% YoY and increased by 56% QoQ to Rs8.3bn in 4Q2025. The higher distribution expense on a quarterly basis is due to increased sales volumes.
Other income stood at Rs972mn, up 90% YoY and 82% QoQ in 4Q2025.
Finance costs clocked in at Rs2bn, up 40% YoY and 62% QoQ due to higher borrowings. As of Dec 2025, total debt of EFERT stood at Rs67bn, up 97% YoY.
The effective tax rate (ETR) for the quarter stood at 49% in 4Q2025 versus 38% in 4Q2024 and 39% in 3Q2025. The tax charge remained high as EFERT booked a previous super tax provision amounting to Rs1.949bn in 4Q2025.
Along with the results, the company declared its final cash dividend of Rs4 per share, lower than industry expectations. This takes the total 2025 cash dividend to Rs15 per share (payout ratio: 64% in 4Q2025 vs. 104% in 4Q2024).
EFERT is currently trading at a 2026E P/E of 11.8 and a dividend yield of 8%.
