External broker reports(aggregated public sources), Topline Securities

Topline Securities

External broker reports(aggregated public sources)

Topline Securities is one of the fastest growing brokerage houses in Pakistan. It has strong equity brokerage, economic / equity research, mutual fund distribution, commodity trading and corporate finance & advisory functions. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Equity Bottom-Up

<ul><li>We expect Topline Fertilizer universe earnings to rise by 20% YoY and 7% QoQ in 3Q2026, primarily driven by higher urea sales volumes, particularly from EFERT, along with relatively higher realized Urea and DAP prices during the quarter on YoY basis.</li><li>Industry urea offtakes improved 2% YoY and 28% QoQ to 1.9mn tons in 3Q2026.</li><li>Due to the above-mentioned reasons, the Topline fertilizer universe turnover is expected to increase by 10% YoY and 46% QoQ to Rs200.5bn in 3Q2026.</li></ul>

We expect Topline Fertilizer universe earnings to rise by 20% YoY and 7% QoQ in 3Q2026, primarily driven by higher urea sales volumes, particularly from EFERT, along with relatively higher realized Urea and DAP prices during the quarter on YoY basis.Industry urea offtakes improved 2% YoY and 28% QoQ to 1.9mn tons in 3Q2026.Due to the above-mentioned reasons, the Topline fertilizer universe turnover is expected to increase by 10% YoY and 46% QoQ to Rs200.5bn in 3Q2026.

Pakistan Fertilizer: Fertilizers Profits Likely to Rise 20% YoY in 3Q2026; Led by Higher Realized Prices

Thematic (Sector/Industry)

<ul>
<li>Pakistan's urea sales in Sep 2026 are expected to rise 43% YoY but down 13% MoM, with volumes of 611k tons.</li>
<li>We believe the MoM decline is primarily attributable to the seasonal impact in our view.</li>
<li>Industry urea inventory is likely to fall at 9 months low, clocking in at 0.65mn tons in Sep 2026 vs 0.75mn in Aug 2026.</li>
</ul>


Pakistan's urea sales in Sep 2026 are expected to rise 43% YoY but down 13% MoM, with volumes of 611k tons.
We believe the MoM decline is primarily attributable to the seasonal impact in our view.
Industry urea inventory is likely to fall at 9 months low, clocking in at 0.65mn tons in Sep 2026 vs 0.75mn in Aug 2026.


Pakistan Fertilizers: Urea Sales for Sep 2026 Expected at 611k Tons, up 43% YoY

<ul><li>Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and outlook.</li><li>Management clarified that gas supply is fully allocated for both plants.</li><li>While commenting on higher debt to equity, management stated that it is expected to normalize significantly by the end of 2026 as post-Rabi season sales generate sufficient cash flows to reduce outstanding debt and finance costs.</li></ul>

Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and outlook.Management clarified that gas supply is fully allocated for both plants.While commenting on higher debt to equity, management stated that it is expected to normalize significantly by the end of 2026 as post-Rabi season sales generate sufficient cash flows to reduce outstanding debt and finance costs.

Topline Flash Note: Engro Fertilizers (EFERT) – Corporate Briefing Key Takeaways (Corrected)

<ul><li>Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and outlook.</li><li>While commenting on higher debt to equity, management stated that it is expected to normalize significantly by the end of 2026 as post-Rabi season sales generate sufficient cash flows to reduce outstanding debt and finance costs.</li><li>We maintain a buy stance on EFERT.</li></ul>

Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and outlook.While commenting on higher debt to equity, management stated that it is expected to normalize significantly by the end of 2026 as post-Rabi season sales generate sufficient cash flows to reduce outstanding debt and finance costs.We maintain a buy stance on EFERT.

Topline Flash Note: Engro Fertilizers (EFERT) – Corporate Briefing Key Takeaways

Cross Asset Strategy

<ul><li>KSE-100 index companies posted earnings of Rs609bn in 4QFY26, up 34% YoY and 20% QoQ.</li><li>The E&P sector witnessed significant boost in profitability, surging 2.6x YoY and 2.3x QoQ to Rs214.2bn, mainly driven by a huge tax reversal following the FCC’s decision on super tax.</li><li>This takes the FY26 dividends to Rs904.4bn, up 11% with a payout ratio of around 45%.</li></ul>

KSE-100 index companies posted earnings of Rs609bn in 4QFY26, up 34% YoY and 20% QoQ.The E&P sector witnessed significant boost in profitability, surging 2.6x YoY and 2.3x QoQ to Rs214.2bn, mainly driven by a huge tax reversal following the FCC’s decision on super tax.This takes the FY26 dividends to Rs904.4bn, up 11% with a payout ratio of around 45%.

Pakistan Strategy - Corporate Profitability Up 34% in 4QFY26; FY26 Earnings Up 23%; Dividends Up 11%

Pakistan

Engro Fertilizers Limited is a fertilizer manufacturing and marketing company with products that focus on balanced crop nutrition and increased yield.

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Engro Fertilizer (EFERT PA)

Pakistan Fertilizer: Fertilizers Profits Likely to Rise 20% YoY in 3Q2026; Led by Higher Realized Prices

We expect Topline Fertilizer universe earnings to rise by 20% YoY and 7% QoQ in 3Q2026, primarily driven by higher urea sales volumes,...

Topline Securities

Pakistan Fertilizers: Urea Sales for Sep 2026 Expected at 611k Tons, up 43% YoY

Pakistan's urea sales in Sep 2026 are expected to rise 43% YoY but down 13% MoM, with volumes of 611k tons. We believe the MoM decline is...

Topline Securities

Topline Flash Note: Engro Fertilizers (EFERT) – Corporate Briefing Key Takeaways (Corrected)

Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and...

Topline Securities

Topline Flash Note: Engro Fertilizers (EFERT) – Corporate Briefing Key Takeaways

Engro Fertilizers (EFERT) held its Corporate Briefing Session for 2Q2026 today, where management discussed financial performance and...

Topline Securities

Pakistan Strategy - Corporate Profitability Up 34% in 4QFY26; FY26 Earnings Up 23%; Dividends Up 11%

KSE-100 index companies posted earnings of Rs609bn in 4QFY26, up 34% YoY and 20% QoQ. The E&P sector witnessed significant boost in...

Topline Securities

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