Fauji Fertilizer Company Limited (FFC) announced its financial results for 1QCY26, reporting a net profit of Rs. 17.5 billion (EPS: Rs. 12.14), up 32 percent year-on-year (YoY).

The company also declared a dividend per share (DPS) of Rs. 8.50 for 1QCY26, compared to Rs. 7.0 in the same period last year.

Net sales increased by 50 percent YoY to Rs. 95.3 billion in 1QCY26. According to Arif Habib Limited, this was supported by an 11 percent YoY rise in prilled urea offtake, a strong 129 percent YoY surge in Sona DAP sales, and a 10 percent YoY increase in granular urea volumes.

The company’s urea market share expanded significantly to 58.0 percent, compared to 37.0 percent in Dec CY25 and 49 percent in Mar CY25, as competitors EFERT and FATIMA saw weaker demand following strong Dec CY25 offtake. The withdrawal of approximately Rs. 150 per bag discounts in Jan CY26 also contributed to improved revenue performance.

Gross margins normalized to 31.0 percent in 1QCY26, compared to 25.2 percent in the previous quarter and 35.6 percent in the same period last year (SPLY). The earlier quarter included Rs. 7.7 billion (Rs. 5.4 per share) in sales tax impairments on key inputs such as feed and fuel gas used in urea production.

Other income surged 43 percent YoY to Rs. 10.7 billion in 1QCY26, driven by dividend income of Rs. 1.75 per share from AKBL, expected income of Rs. 5.1 billion from TEL, and higher returns on investments. The company also maintained a strong standalone cash position of Rs. 181 billion as of March CY26.

Finance costs increased by 28 percent YoY to Rs. 2.2 billion in 1QCY26, as lower interest rates were offset by a higher debt position, which rose to Rs. 80 billion compared to Rs. 49 billion in SPLY.

On the balance sheet side, inventory levels, which had peaked at Rs. 60 billion in Sep CY25, normalized to Rs. 45 billion in 1QCY26, supported by stronger offtake over the past two quarters.

The brokerage maintains a Buy stance on FFC with a December CY26 target price of Rs. 643 per share. The stock is currently trading at CY26e and CY27f price-to-earnings (P/E) multiples of 9.5x and 9.1x, respectively.

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