Fauji Fertilizer eyes growth post-FFBL merger
Fauji Fertilizer Company (FFC) shared an optimistic outlook for 2025 at its corporate briefing, highlighting post-merger consolidation benefits, new product developments, and plans for Shariah compliance as key strategic priorities.
The company confirmed that the successful merger of Fauji Fertilizer Bin Qasim Limited (FFBL) with FFC had been completed, with some audit-related adjustments incorporated in 4Q2024. Management said the integration will strengthen operational efficiency, enhance market reach, and streamline financial performance across the group.
Read More: FFBL hikes DAP fertilizer price in Pakistan
FFC also revealed that it is working with advisors to achieve Shariah compliance, reflecting growing investor demand for faith-based investment opportunities. The company plans to align its capital structure and financing practices accordingly.
Among product developments, FFC has launched its Zinc Coated Urea with an annual production capacity of 100,000 tons. The new fertilizer, priced at Rs5,200 per bag versus Rs4,400 for regular urea, is designed to improve soil health and crop yields. The initiative supports the government’s broader push for micronutrient-enriched fertilizers to raise agricultural productivity.
Following the acquisition of Agritech Limited (AGL), management expressed optimism about future prospects once AGL’s gas supply constraints are resolved. FFC continues to source feed gas from Mari Petroleum at Rs580 per mmbtu, with no immediate changes expected.
As of December 2024, FFC’s urea and DAP inventories stood at 41,000 tons and 31,000 tons, respectively, compared to total industry stockpiles of 360,000 tons and 102,000 tons. The local-to-international urea price gap currently stands at Rs2,125 per bag, maintaining a competitive export incentive.
The company has established 73 Sona Centers nationwide to ensure timely and controlled distribution of fertilizers, improving supply chain efficiency and farmer access. FFC’s market share rose to 48% in urea and 62% in DAP during 2024, compared to 43% and 60% a year earlier.
On the financial side, investment income totaled Rs16.5 billion in 2024, though management expects this to decline amid falling interest rates. The firm’s debt-to-equity ratio stood at 19:81, with a stronger current ratio of 1.14x at end-2024 versus 0.93x the previous year, reflecting improved liquidity.
Topline analysts reiterated a buy stance on FFC, noting that the stock trades at a 2025E P/E of 7.6x with a dividend yield of 11%, supported by stable margins, a strong balance sheet, and new product growth.
