Research Analyst Views on FFC

According to research analysts, FFC has the premium urea which is first preference of the farmers. Currently, there is discount provided on urea fertilizers which has resulted in higher offtake. The offtake of the urea is highest during the khareef and rabi season. It is expected, the rabi season which is the last quarter of the year, will consume 30% to 40% of total production of fertilizer. Along with this, the reduction in sales tax from 17% to 5% is the current budget will effect the earning of fertilizer industry and of FFC. There are currently, two plants that are operated by the FFC, where one operates on the concessionary gas while the other one on normal rates. However, even with a subsidy of Rs 27.96 billion as shown below announced by federal government in budget 2016-17 with a 50 percent provincial share, the offtake has been only been only minimal

With stable gas supply in the current fiscal year, the fertilizer companies have accumulated substantial inventory. To reduce inventories, the government has tabled a proposal to export 800 tonnes of Urea in international markets.However, the international prices for fertilizer are lower compared to Pakistan, which along with higher transportation cost may affect the margins adversely.

Earning Forecast

The equity Investment by FFC in shown below

The Forecast by brokerage is as following

Estimates BMA.Capital JS.securities AKD.Securities Elixir.Securities Optimus.Capital.Management
1 EPS in PKR 2.8 2.22 3.22 2.98 3.25
2 Target Price in PKR 110 117 120.4 104 100
3 Dividend in PKR 2.25 1.95 2.9 2.68 2.9
Estimates average Max Min
1 EPS in PKR 2.894 3.25 2.22
2 Target Price in PKR 110.28 120.4 100
3 Dividend in PKR 2.54 2.9 1.95