Inside Financial Markets

GIDC and urea price hikes

ureaGIDC and urea price hikes

Reportedly, Gas Infrastructure Development Cess (GIDC) has been increased for fertilizer feedstock by Rs103/mmbtu and for fuelstock by Rs50/mmbtu, thereby increasing the cost of production of fertilizer companies. However, as per our sources Engro has also raised urea prices with effect from today i.e. Jan 02, 2014 by Rs 178( inclusive of GST). Therefore, the cess rate hike has been neutralized by Engro which is likely to be followed by other urea producers. In this scenario, as we have previously intimidated FATIMA may turn out to be the major gainer due to its subsidized feedstock gas agreement at $0.7/mmbtu. FATIMA may witness a margin improvement and have a positive impact of Rs0.22/share (4% of 2014 EPS). We also flag that raise in gas tariff is also in the pipeline of Rs100-150/mmbtu, which if passed through will further augment FATIMA’s earnings.

JS Research


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)