ENGROH's growth story points to Rs359 per share

June 29, 2026 (MLN):Engro Holdings Limited (ENGROH) is projected to reach a target price of Rs359 per share from its current market price of Rs284, a total upside of 25% for June 2027, as the company's expanding telecom tower portfolio and favorable fertilizer dynamics position it for sustained earnings growth.

Topline Securities, in its latest company update, reiterated a BUY stance on ENGROH, noting the stock trades at a 44% discount to its sum-of-the-parts (SOTP) value of Rs499 per share.

The brokerage also revised up its consolidated earnings estimates for ENGROH by approximately 20% for 2026E–2029F, driven by an upward revision in Engro Fertilizer (EFERT) projections published in June 2026 and refinements in tower business assumptions following the latest results and analyst briefing.

Tower Business

Engro Connect (Private) Limited  comprising Enfrashare and the Deodar portfolio  is expected to be the largest value driver in ENGROH's SOTP, contributing Rs219 per share based on a discounted cash flow (DCF) valuation.

The company acquired Jazz's tower portfolio "Deodar" at an enterprise value of US$562.7m, comprising US$375m in debt and US$187.7m in equity, taking its total tower count to over 15,000.

Engro Connect has signed Jazz as its anchor tenant for 12 years, with a price escalation clause linked 70% to Rs devaluation and 30% to domestic inflation, translating to an assumed annual rental increase of approximately 7%.

Tenancy ratio for the tower business is assumed at 1.32x for 2026E, expanding to 1.37x and 1.42x in 2027F and 2028F respectively, against a management target of 1.8–1.9x over the longer term.

The brokerage expects the tower business to post an earnings CAGR of approximately 31% over the next three years, supported by anticipated 5G rollout in Pakistan that is expected to increase co-location demand materially.

EPS contribution from the tower segment is projected at Rs8.1, Rs11.2, and Rs14.5 per share for 2026E, 2027F, and 2028F, respectively.

Fertilizer

Engro Fertilizer (EFERT), in which ENGROH holds a 56.27% stake, is expected to benefit from favorable industry dynamics including an industry-level production loss of approximately 100,000 tons due to RLNG shortages, rollback of discounts offered in 2025, and a price increase of Rs100–150 per bag.

Wheat prices have risen from Rs1,516/40kg in June 2025 to Rs2,423/40kg in June 2026. EFERT's gross margins are projected to reach 34.8% in 2026E versus 30.6% in 2025.

EPS contribution from EFERT to ENGROH's consolidated earnings is estimated at Rs14.9, Rs16.7, and Rs17.1 per share for 2026E, 2027F, and 2028F, respectively.

Thermal Assets

Engro Powergen Thar Limited (EPTL), Sindh Engro Coal Mining Company (SECMC), and Engro Powergen Qadirpur Limited (EPQL)  reclassified back into ENGROH's books after the termination of Share Purchase Agreements with Liberty Power Holdings in April 2025 are expected to collectively add Rs16.8, Rs19.7, and Rs22.8 per share to earnings in 2026E, 2027F, and 2028F, respectively, including the debt component of EPTL and SECMC.

On a cash basis, EPTL alone is expected to contribute Rs9.4, Rs11.3, and Rs13.4 per share over the same period.

Key Financial Projections

Source: Company accounts, Topline Securities

The brokerage expects ENGROH's consolidated earnings to grow at a CAGR of approximately 15% during 2026E–2029F.

The company is expected to resume dividends in 2027 or continue share buybacks, which are considered more tax-efficient.

Payout capacity is estimated at Rs12bn and Rs14bn for 2027F and 2028F, respectively.

Key risks cited include slower-than-expected co-location growth, higher interest rates, regulatory and tariff revisions on thermal assets, gas supply disruptions to the fertilizer business, a significant decline in international urea prices, and global macroeconomic uncertainty.

Copyright Mettis Link News