External broker reports(aggregated public sources), Topline Securities

Topline Securities

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External broker reports(aggregated public sources)

Equity Bottom-Up

Fauji Fertilizer Company / Equity Bottom-Up

<ul><li>We maintain our BUY stance on Fauji Fertilizer (FFC) with a Jun 2026 Sum of the Parts (SOTP) based Target Price (TP) of Rs485/share, offering a total return of 40%, including dividend yield of 11%.</li><li>Our liking for the stock is based on (1) cost advantage to the company amidst lower gas prices, (2) stronger portfolio and size after merger with its associate FFBL, (3) investment in gas supply network to ensure continuity and higher efficiency, and (4) strong cash balance to target bigger projects.</li><li>Key risks to our thesis and valuation include an increase in gas prices before 2029 except inflationary increase, lower than expected urea offtakes, higher than expected/prolonged price discounts in urea, and lower farm income.</li></ul>

We maintain our BUY stance on Fauji Fertilizer (FFC) with a Jun 2026 Sum of the Parts (SOTP) based Target Price (TP) of Rs485/share, offering a total return of 40%, including dividend yield of 11%.Our liking for the stock is based on (1) cost advantage to the company amidst lower gas prices, (2) stronger portfolio and size after merger with its associate FFBL, (3) investment in gas supply network to ensure continuity and higher efficiency, and (4) strong cash balance to target bigger projects.Key risks to our thesis and valuation include an increase in gas prices before 2029 except inflationary increase, lower than expected urea offtakes, higher than expected/prolonged price discounts in urea, and lower farm income.

Fauji Fertilizer Company (FFC) – BUY; Cost advantage continues to help; diversification play