Islamabad: Engro Corporation (ENGROH) anticipates substantial expansion in its independent telecom tower enterprise, even as it addresses challenges in the fertilizer sector and energy landscape, according to insights shared during a management meeting with JS Global. The corporation, which recently concluded a US$563 million transaction with VEON Group Pakistan, positioning itself as a major player in the global independent tower market, believes this sector holds significant promise.
Engro envisions considerable tenancy augmentation for its tower infrastructure, noting that Jazz, a major telecom operator, has currently shared only a small fraction of its portfolio. The firm also projects that Deodar, its tower subsidiary, will surpass Engro Enfrashare's EBITDA margins in the coming years. Despite the rise of satellite services, Engro remains confident in the tower business, asserting that satellites are not a competitive threat in areas with existing tower coverage due to cost considerations.
On the fertilizer front, the firm anticipates a manageable impact from recent floods, projecting a demand dip of no more than 4-5%. However, fertilizer reserves have swelled above the safe limit, leading Engro to expect government-approved exports to alleviate the excess after the fourth quarter of 2025.
Engro also discussed the financial performance of its power generation arm, Engro Powergen Thar, reporting strong receivable collection rates. While current outstanding receivables remain significant, the firm anticipates reliable cash flows in the near future due to high recovery rates. Regarding ongoing circular debt resolution talks, Engro confirmed they haven't yet been approached by the government, but anticipates potential concessions like waivers on late payment surcharges.
The firm also addressed several other key developments, including the stability of its LNG terminal operations despite Qatar-Pakistan LNG renegotiations, ongoing discussions regarding the Vopak terminal arrangement expiring next year, and plans to expand its coal mining capacity. Currently, ENGROH is trading at attractive price-to-earnings multiples, according to JS Global.