EFERT's market share recovery underway as supply glut eases

September 04, 2026 (MLN):  Engro Fertilizers limited (EFERT) weak urea offtake during the first half of CY26 largely reflected its pricing premium against cheaper competing inventory rather than any deterioration in underlying demand, with lower-priced stocks now gradually depleting and pointing to an early recovery in the company's volumes and market share.

According to a research note by Ismail Iqbal Securities, EFERT's urea offtake is expected to reach 327,000 tonnes in August 2026, marking an early signal of recovery.

The report noted that the prolonged industry inventory overhang of around 1 million tons now appears to be a thing of the past, as the supply glut has started to unwind following lower production from plants operating on RLNG, with temporary closures amid gas shortages stemming from the Middle East conflict.

The brokerage noted that management has recently reiterated that no discounting is expected, supported by improving farmer economics, which should allow inventory to normalise without compromising margins.

Industry closing urea inventory is projected at around 350,000 tonnes by December 2026, with nearly 80% held by EFERT, implying a meaningful drawdown from current levels through the second half of the year.

Accordingly, a sustained recovery in offtake, accompanied by slight discounts alongside tighter industry supply, is expected to support revenue going forward.

On the earnings front, the brokerage projected EFERT's EPS at Rs18.1 and DPS at Rs14.5 for 2HCY26F under a no-discount scenario, rising to Rs23.5 and Rs18.3, respectively, for full-year CY26F.

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