Topline Targets Engro Share Price at Rs 490

Staff Report

Topline Pakistan Research has set a targeted price of Rs490 per share on Engro Corporation.

“We maintain our ‘Buy’ stance on Engro Corporation (ENGRO) with a Target Price of Rs490/share, offering a potential upside of 31%,” Topline Pakistan Research said.

Assuming no major projects, we anticipate that ENGRO will pay a one-time special dividend of Rs45/share in 2025. This would bring the total dividend to Rs91/share in 2025,” it said.

Engro Corporation (ENGRO) announced to the exchange today that its wholly-owned subsidiary, Engro Energy Limited (EEL), has entered into definitive agreements with Liberty Power Holding (Pvt.) Limited (a wholly-owned subsidiary of Liberty Mills Limited) for the sale of its entire holdings as follows: (1) 68.9% shareholding in Engro Powergen Qadirpur Limited (EPQL), (2) 50.1% shareholding in Engro Powergen Thar (Private) Limited (EPTL), and (3) 11.9% shareholding in Sindh Engro Coal Mining Company Limited (SECMC).

The transaction values of EEL’s shareholdings are as follows: (1) EPQL: Rs7.5bn, (2) EPTL: Rs21.04bn, and (3) SECMC: Rs6.21bn, with a total value of Rs35bn. This marks one of the largest acquisitions in recent history in Pakistan. Deal Sealed: Engro Energy Finalizes Sale of Thermal Assets

In our report titled “Engro Corporation Limited (ENGRO) – ‘Buy’, Selling Thermal Assets to Unlock Value,” issued on January 6, 2024, we highlighted that ENGRO planned to sell the majority of its stake in thermal assets for a cash consideration of approximately Rs35bn.

The cost of these thermal assets on the books of Engro Energy is estimated to be around Rs13-15bn. Therefore, after selling its assets, Engro Energy is expected to record a before-tax gain of around Rs20bn.

Subsequently, Engro Energy may announce a dividend to ENGRO, which would not incur any tax implications as it is a wholly-owned subsidiary. The after-tax amount of the dividend to ENGRO is projected to be in the range of Rs27-29bn (Rs51-54/share).

We anticipate that regulatory approval and other processes will take at least 6-9 months to conclude this deal.