Karachi, May 04, 2023 (PPI-OT): Fertilizers: April urea sales likely to drop 11% YoY

As per provisional data, Urea sales in Apr-2023 are expected to clock in at 408k tons, down 11% YoY, taking 4MCY23 offtake down by 3% YoY. Similarly, DAP offtake for Apr-2023 is expected to clock in at ~42k tons vs. 95k tons in SPLY depicting a decline of 56% YoY.

Fauji Fertilizer Company (FFC) is likely to post a 27%/38% YoY/MoM decline in sales for Apr-2023 to ensure buffer stock for Kharif demand. With production estimates at 580k tons, we expect the industry's closing inventory to clock in around 240k tons for Apr-2023.

We reiterate our Overweight stance on the Fertilizer sector given stable margins and cash-rich position supporting higher stable dividends. Our top picks FFC and EFERT offer an average CY23E D/Y of around 20%.