INVESTMENT

ANALYSIS &
PORTFOLIO MGT
DR. ISMA ZAIGHAM

FINAL TERM REPORT 2022

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GROUP LEADS

REESHA KHAN

MUHAMMAD FARHAN UDDIN

MUHAMMAD WAJAHAT ANSARI

MUHAMMAD ADEEL FAROOQ

SYED NOMAN ZIA

SIDDIQUE WAHID

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Firstly, we would like to thanks to Almighty Allah, for giving us the stand, will-
power, patience and making us capable to complete this report.
The project proves to be a very good learning experience. We deal with intense
pressure to process the knowledge and information as to our need and requirement.
We own great deal of gratitude to the people who helped us in every possible manner
in the compiling of this report.
Secondly, we would like to thanks Ms. Isma Zaigham our course instructor who
provided us wonderful opportunity to study a new and valuable course, who
coordinated and collaborated with us and gave us a skill-full guidance and valuable
time.
Lastly, we hope and pray that the prepare reports meets the standard conditions we
had obeyed to and the readers have worthy time going through it.

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TABLE OF CONTENT

Contents
FINAL TERM REPORT 2022 ................................................................................................... 1

INTRODUCTION ..................................................................................................................... 5

ECONOMIC FACTORS AND CORPORATE EVENTS............................................................ 6

ENGRO FERTILIZER LTD................................................................................................... 6

FATIMA FERTILIZERS ....................................................................................................... 8

BETA ...................................................................................................................................... 10

RISK BASED ON BETA ..................................................................................................... 10

ENGRO FERTILIZER LTD................................................................................................. 10

FATIMA FERTILIZER ....................................................................................................... 11

RATIO ANALYSIS AND RISK AND RETURN ..................................................................... 13

GRAPHICAL REPRESENTATION RATIO ANALYSIS ........................................................ 14

LIQUIDITY RATIOS .......................................................................................................... 14

DEBT MANAGEMENT RATIO ......................................................................................... 15

PROFITABILITY RATIOS ................................................................................................. 16

MARKET VALUE RATIOS ................................................................................................ 17

COVID 19 IMPACT OVER RATIOS AND COMPANY OPERATIONS ................................ 18

ENGRO FERTILIZER LTD................................................................................................. 18

FATIMA FERTILIZER ....................................................................................................... 18

CONCLUSION........................................................................................................................ 19

REFRENCES........................................................................................................................... 20

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INTRODUCTION

Engro Fertilizers Limited – a 56.3% owned subsidiary of Engro Corporation – is a

premier fertilizer manufacturing and marketing company having a portfolio of
fertilizer products with significant focus on balanced crop nutrition and increased
yield.
“WE ARE PASSIONATE ABOUT TRANSFORMING
THE AGRICULTURAL LANDSCAPE, BRINGING
CHANGE AND HELPING THE FARMER GROW.”

The Fatima Fertilizer Company Limited was incorporated on December 24, 2003, as a
joint venture between two major business groups in Pakistan namely, Fatima Group
and Arif Habib Group. The foundation stone of the company was laid on April 26,
2006 by the then Prime Minister of Pakistan. The construction of the Complex
commenced in March 2007 and is housed on 950 acres of land.

“TO BE A WORLD CLASS MANUFACTURER OF

FERTILIZER AND ANCILLARY PRODUCTS, WITH A
FOCUS ON SAFETY, QUALITY AND POSITIVE
CONTRIBUTION TO NATIONAL ECONOMIC GROWTH
AND DEVELOPMENT. WE WILL CARE FOR THE
ENVIRONMENT AND THE COMMUNITIES WE WORK IN
WHILE CONTINUING TO CREATE SHAREHOLDERS'
VALUE.”

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ECONOMIC FACTORS AND CORPORATE EVENTS

YEARS AVERAGE EFERT – FATF – INFLATION GDP INTEREST

MKT – RATE RETURNS RETURNS RATE GROWTH RATE
% % % % % %
2016 0.78 -0.38 -0.21 2.86 5.5 5.75
2017 -0.19 -0.20 -0.22 4.8 5.2 5.75
2018 -0.21 0.10 0.24 4.7 5.5 6.5
2019 0.28 0.10 -0.37 6.8 1.9 13.25
2020 0.17 -0.21 0.23 11.2 -0.47 7
14 13.25
11.2
12
10
8 6.5 6.8 7
5.75
5.5 5.75 5.5 INFLATION RATE
5
4.2
8 4.7
6 GDP GROWTH
4 2.86
1.9 INTEREST RATE
2
-0.47
0
2016 2017 2018 2019 2020
-2

ENGRO FERTILIZER LTD.

2016
Stock market shows the average return of 0.78% however Engro fertilizers and
Fatima fertilizers shows average return of -0.38% and -0.21% respectively. As per the
statement Engro fertilizers is not in line with stock market as its return is lower than market
return, it is so low that it’s going in negative. The economic condition in 2016 was overall
good but due to a corporate event which was, urea offtake was low for the start of 2016
mainly due to poor crop economics as well as low international prices and subsidy rumors on
urea. This event reflected returns and stock prices of Engro in a way that returns reduce from
-0.26 to -0.38 and stock prices also reduce from 84.13 to 67.98 as compare to 2015.

2017
Stock market shows the average return of -0.19% however Engro fertilizers and
Fatima fertilizers shows average return of -0.20% and -0.22% respectively. As per the
statement Engro fertilizers is not in line with stock market as its return is lower than market

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return, The economic condition in 2017 was badly in terms of inflation had a big change from
2016 to 2017 as it almost increase by 8.35 times that could be a reason for lower returns. On
the other side stock prices hard increases and 2017 although inflation rate is higher that
means stock price had decreases in current years but Engro fertilizer stock prices increases
although Economic conditions are worst as compared to 2016 so that stock price shows
increase in 2017. Due to inflation rate is almost 8.35 times more so actually in monetary
terms it's gave null effect. Stock prices increase just because Engro Fertilizer performed
outstanding in this year.

2018
Stock market shows the average return of -0.21% however, Engro fertilizers and
Fatima fertilizers shows average return of 0.10% and 0.24% respectively. As per the
statement, Engro fertilizers show positive return in relation with stock market as its return is
higher than market return. The rising interest rates from 2017 to 2018 of 5.75% to 6.5%
respectively also increases borrowing cost, even the borrowing cost was higher Engro
fertilizers borrowed more, which could be for introducing new products. They introduced 4
new products leading towards the highest ever profits. In 2018, Engro won the Pakistan
Advertisers Society (PAS) award for its “Aam Aadmi Nahi” campaign in the category of
“Agriculture & Related Industries” in PAS AWARDS 2018. Moreover, highest ever full year
sales of Urea were also achieved resulting in high returns and increasing the stock price from
67.22 to 72.02.

2019
Stock market shows the average return of 0.28% however, Engro fertilizers and
Fatima fertilizers shows average return of 0.10% and -0.37% respectively. As per the
statement, Engro fertilizers show decreasing return in relation with stock market as its return
is less than market. The economic condition is worst in all three cases as inflation, GDP
growth rate and interest rate, that lead to worsen the Engro fertilizers performance in terms of
return and stock price but it’s surprising that Engro fertilizers shows depicted growth in 2019
as its CEO stated that We continued to build upon our legacy of 50+ years and set records
across our spectrum of business endeavors. Furthermore, company maintains the highest
standards of safety and environment at its plant sites for which the Company was awarded for
Excellence in Safety, Environmental Compliance, and Energy Efficiency at the International
Fertilizers Association Awards in Paris after this winning moment The Zarkhez Plant

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achieved the highest ever score of 86%, beating the previous score of 83%, putting Engro in
first place across the entire green office network in Pakistan. Under the above news the stock
prices effects positively, beating the previous price of 72.02 to 73.57.

2020
Stock market shows the average return of 0.22% however, Engro fertilizers and
Fatima fertilizers shows average return of -0.21% and 0.23% respectively. As per the
statement, Engro fertilizers show decreasing return in relation with stock market as its return
is less than market it is so low that it’s going in negative. In 2020, Covid was the major factor
affecting every economy globally, the economic condition was worst in all three cases as
compare to all 5 years 2016-2020 as inflation increased to 11.2%, GDP growth rate faced a
tremendous decline trend it went till -0.47%, increasing public debt and using reserves.
Interest rate was reduced to 7% that supported companies to increase borrowings on low cost
to fulfill their major needs. Hence, the stock price was reduced from 73.57 to 63.86 which led
to decline in returns due the pandemic all over the world.

FATIMA FERTILIZERS

2016
Stocks return of Fatima fertilizer is 0.21% in 2016 due to the positive growth of GDP
5.5%wich creates bullish trend in stock market so more investor will come for investment so
increase stocks price and returns too. Interest rate were also not very high investor preferred
for investment in stocks rather than savings in banks and inflation rate was also low which is
2.86% which is good for growing stocks like Fatima where return lies on annually. On the
other hand, stock prices also decrease in 2016 as compare to 2015 from 44 to 36.89.

2017
Stocks return was negative which is -0.22% in 2017 due to the increases in inflation to
4.15% which is not favorable for Fatima fertilizer stocks so results in negative returns and
interest rate is also high comparatively previous year which is 2.86% to 5.75% so investor
will move to bank who offers more returns on savings rather than investing in stocks so
results in less returns of stocks due to less demand. As its mentioned in report that Discount
Rate Increase Finance Cost of the Company would increase, impacting the shareholder value
negatively. Thus, lower EPS would negatively affect share price hence, the stock price was
reduced from 36.89 to 31.3.

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2018
Due to the decreases in inflation rate from 4.15% to 3.93% which is good for annually
return stocks and increase in growth of GDP to 5.8% bullish trends in stocks market so that’s
why it helps out to recover from negative to positive trend at 0.24% and Fatima fertilizer also
announced for expansion in business by merging its subsidiaries which attracts long term
investors. Market Share improved from 20 to 23%. Under the above news the stock prices
effects positively, beating the previous price of 31.3 to 34.1.

2019
Due to pandemic raised in the starts of this year all economic activities were shut
down so GDP was declined to 1% and inflation rate rose to 6.74% which creates bearish
trend in stock market and annually return stocks not performed well in high inflation due to
rise in finance cost so its stocks return declined to in negative which was -0.37%. Moreover,
one of the factors which shows drastic change in a stock price in 2019 as compare to 2018
which is on decreasing mode as Fatima fertilizers faced technical issue: Sadiqabad Plant
faced some technical issues due to which planned production target for the year could not be
achieved. The issues have been addressed and the Company has taken all the necessary
measures for disruptions-free optimum level operations of Sadiqabad Plant in the future.

2020
As restrictions of covid-19 become ease for corporate sector and due to merger of its
subsidiaries which they were announced in Oct 2018 so they enjoyed their business
expansion policy as more investors invested in Fatima fertilizer stocks which results in
increases its stocks returns to 0.23% and interest rate was also too down which was 1.32% so
investors also invested in stocks rather than saving in a bank. Moreover, its share prices also
show positive effect as compare to 2019 hence, FATF previously had issue in Sadiqabad
plant of technical problem arises which was resolved and performed outclass Sadiqabad Plant
reliability yielding ever highest on stream-factor (97.8%). Market Share improved from 23%
to 24% earnings per share increased to Rs. 6.32 per share compared to Rs. 5.75 per share in
2019. Under the above news the stock prices effects positively, beating the previous price of
27.14 to 28.96.

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BETA
RISK BASED ON BETA

Beta is a measure of a stock's volatility in relation to the overall market. By

definition, the market, such as the KSE 100 Index, has a beta value nearly 1.0 on average,
and individual stocks are ranked according to how much they deviate from the market. Beta
is a concept that measures the expected move in a stock relative to movements in the overall
market. Beta greater than 1.0 suggests that the stock is riskier than the broader market, and a
beta less than 1.0 indicates a stock with lower riskiness of stock.

BETA VALUES
0.90
0.85
0.80 0.79
0.70 0.70 0.69 0.67
0.60 0.63
0.56 0.54
0.50 0.53 0.51
0.40
0.30
0.20
0.10
-
2016 2017 2018 2019 2020

ENGRO FATIMA

ENGRO FERTILIZER LTD.

The Beta value of Engro Fertilizer ltd. remains below 1.0 from FY-2016 to FY-2020
which shows that the value of stock is less volatile throughout this tenure for Engro. In
depth, if we analyze the movement of beta value of Engro, we can see that it shows a
decreasing trend from FY-2016 to FY-2018 which an impact of 0.26, but in FY-2019 it
shows increasing trend and positive impact by increase of 0.16. Throughout in agricultural
industry, Engro ltd has less risker stock with less return. Engro ltd stock is less risky. In the
year 2019 beta again came over on its decreasing trend and dropped by the value of 0.18
which indicates that the value of return also got decreased compare to 2018 which made an
increase in the average return for the year from FY-2018 – FY2019. In the year 2020 beta is
at 0.51 which is less risky. Overall return of Engro ltd was lesser then in ideal market with

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value of beta greater than 1.0 but here in the case of Engro ltd risk & return is not extreme
that means investors that earn lower return with lower risk are more willing to pick Engro ltd
as their investment option. And for better picture, we can see that the decrease in Beta value
also on the other hand affecting the realized rate of return of FY-2019 to FY-2020 that is
also decreased by approximately 3 times of ROR of previous year FY-2019.

FATIMA FERTILIZER

0.9

0.8

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0
2016 2017 2018 2019 2020

EFERT FATF

The Beta value of Fatima Fertilizer remains below 1.0 from FY-2016 to FY-2020
which shows that the value of stock is less volatile throughout this tenure. In depth, if we
analyze the movement of beta value of FATF, we can see that it shows increasing trend from
FY-2016 to FY-2017 with a change of 0.15, but in FY-2018 it shows decreasing trend and
major impact of fall from 0.85 to 0.56 that is negative impact of 0.29 in the horizon of FAFT
throughout in agricultural industry, FATF has less risker stock with less returns. FATF stock
is less risky. In FY-2019 beta again came over on its increasing trend growth occurred by
the value of 0.13 which indicates that the value of return also got increased compared to
previous events, which made an increase in the average return for the year from FY-2018 to
FY2019. In the year 2020 beta is at 0.67 which is less risky. And overall return of FATF was
lesser then in ideal market with value of beta greater than 1.0 but here in the case of FATF,
risk & return is not considered as ideal that means investors that earn lower return with
lower risk are more willing to choose FATF as their investment option. And for better

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picture, we can see that the increase in Beta value also on the other hand affecting the
realized rate of return of FY-2019 to FY-2020 to be increased as shown above. (See graph of
RoR).

FATF have more upward trend beta i.e., greater beta values ranging (0.54-0.85)
which is considerably better than EFERT. The Beta value is greater of FATF from EFERT
except FY 2016 and FY 2018. On the other hand, Both the companies hold their investment
to maturity which represent investments with fixed or determinable payments and fixed
maturity where the Company has positive intent and ability to hold such investments to
maturity.

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RATIO ANALYSIS AND RISK AND RETURN

ENGRO FERTILIZER LTD. 2020 2019 2018 2017 2016
Working Capital
Amount 10,067,503 6,307,572 2,669,938 (669,467) 3,080,747
Management
LIQUIDITY RATIO
Current Ratio Times 1.21 1.12 1.07 0.98 1.13

DEBT Debt Ratios % 64.9% 66.8% 62.3% 61.4% 59.7%

MANAGEMENT
RATIO Debt Equity Ratio Times 1.85 2.01 1.65 1.59 1.48
Return on Total
% 13.1% 14.4% 14.6% 9.5% 9.1%
Assets
PROFITIBILITY Basic Earning Power
% 14.7% 24.1% 20.5% 16.5% 16.1%
RATIOS (BEP) Ratio
Return on Common
Times 1.26 1.39 1.25 0.76 0.70
Equity
Price/Earnings Ratio Times 5.02 5.28 5.54 8.91 5.04
MARKET VALUE
RATIOS
Market/Book Ratio Times 8.24 5.30 1.77 5.96 2.86

FATIMA FERTILIZER LTD. 2020 2019 2018 2017 2016

Working Capital
Amount 1,406,452 (6,033,006) 2,171,108 1,951,352 1,082,784
Management
LIQUIDITY RATIO
Current Ratio Times 1.03 0.88 1.09 1.10 1.03

DEBT Debt Ratios % 44.7% 49.7% 43.4% 45.9% 57.2%

MANAGEMENT
RATIO Debt Equity Ratio Times 0.81 0.99 0.77 0.85 1.33

Return on Total
% 8.4% 7.8% 12.1% 10.6% 8.8%
Assets
PROFITIBILITY Basic Earning
% 14.1% 13.5% 18.2% 15.0% 13.0%
RATIOS Power (BEP) Ratio
Return on Common
Times 0.28 0.25 0.29 0.23 0.21
Equity
Price/Earnings
Times 4.60 4.62 5.77 6.13 7.92
MARKET VALUE Ratio
RATIOS
Market/Book Ratio Times 0.70 0.72 1.10 1.21 1.64

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GRAPHICAL REPRESENTATION RATIO ANALYSIS

LIQUIDITY RATIOS

1.40

1.20 1.21
1.13 1.10 1.12
1.09
7
1.00 1.03 1.03
0.98
0.88
0.80

0.60

0.40

0.20

-
2016 2017 2018 2019 2020

EFERT FATF

For Engro Fertilizer ltd., Current ratio shows the upward trend of liquidity ratio from
FY-2017 to 2020. In FY 2016 to 2017 the current ratio of EFERT decline from 0.15 units. So
overall position of EFERT indicates an upward trend which means that EFERT has enough
liquid assets to repay its short debt obligations. However, in FY 2017, the EFERT current
ratio is below 1. Which indicates that however, it slipped to 0.98 due to lower margins,
increased utilization of short-term borrowing and current maturities of long-term finance.
Risk that also might affect the stock price and company might be baring operations from max
debt management that we can see in SOFP of Engro in FY 2017.

On the other hand, for Fatima Fertilizer, current ratio indicates a mixed trend due to
economic factors discussed primarily above. Which create challenges for FATF for managing
their operations. Liquidity position of Fatima has shown tremendous improvement till 2018
resulting from profits arising out of increased sales volume and better margins. But in FY
2019, it slipped below 1.0 that to 0.88, due to lower margins, increased utilization of short-
term borrowing and current maturities of long-term finance. But the worst scenario continues
to its growth and in FY 2020, however the liquidity position of FATF again comes to its
stability position.

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DEBT MANAGEMENT RATIO

2.50

2.00 2.01
1.85
1.59 1.65
1.50 1.48
1.33

1.00 0.99
0.85 0.67 0.65 0.81
0.60 0.57 0.61 0.62 0.77
0.46 0.43 0.50 0.45
0.50

0.00
2016 2017 2018 2019 2020

ENGRO-D/A FATIMA-D/A ENGRO-D/E FATIMA-D/E

Engro Fertilizer ltd., Debt equity ratio indicates an upward trend until there was a
major impact of WACC in FY 2020, however before this condition D/E ratio increased to
1.59 when compared to 1.48 of FY 2016 and it will continue to grow till FY 2019 to 2.01. It
might be because of Engro applied for further borrowing during the span of 2016 to 2019,
increase in long term debts for permanent working capital needs. Debt Assets ratio also
picturizing the same impact due to higher policy rates, increased level of borrowings and
Covid-19 impact as compared to previous years. Weighted average cost of debt increased to
13.34% in FY 20 as compared to 9.8% in FY 19 that might be the reason that Engro shifted it
major operations and plants that was financing through debt shifted to equity.

On the other hand, Debt equity ratio in FATF shows mixed trend, and a similar effect
of increase of WACC might be seen over FATF. The D/E ratio decreased to 0.81 (FY 2020)
when compared to 1.33 of FY 19. Debt service ratio fell in FY 20 due to higher policy rates;
increased level of borrowings and Covid-19 impact as compared to previous years. Weighted
average cost of debt increased to 13.34% in FY 20 as compared to 9.8% in FY 19 due to
increase in interest rates. However, the overall debt management of FAFT is far more ideal
because their debt is less in proportion as compared with EFERT throughout the period.

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PROFITABILITY RATIOS

160.0%
140.0% 139.0%
120.0% 124.8% 125.9%

100.0%
80.0% 75.9%
69.7%
60.0%
40.0%
20.0% 9.1%8.82%
1.3% 9.5%10.263%.0% 12.218
14.6% %.9% 14.4%7.82%
5.1% 27.7%
13.1%8.4%

0.0%
2016 2017 2018 2019 2020

ENGRO - ROA FATIMA - ROA ENGRO - ROE FATIMA - ROE

Engro has recorded annual sales growth in till FY 2018. With the increase in sales
revenue, the Company’s gross profit steadily increased from FY 2015 to FY 8.94%. The
growth in ROE is aligned and moves in the same manner that both EFERT and FATF except
in FY 2019 and FY 2020, that the ROE of EFERT decrease while the FATF ROE increased
slightly. The decrease in roe on EFERT might be cause of the rumor that was spread against
UREA – the main product of EFERT, that affects the sales volume of EFERT and users
shifted to FATF that provide the growth in Sales Volume and lower gross profit.

0.18 0.24
0.25 0.15 0.21 0.14 0.14
0.13
0.16 0.17
0.20 0.15
0.15
0.10 FATIMA-BEP
0.05
ENGRO-BEP
0.00
2016 2017 2018 2019 2020

ENGRO-BEP FATIMA-BEP

While FATF improved profitability and margins until 2018 faced down turn in FY
2019. The decline in profitability ratios in primarily on account of lower sales volumes and
shrunk gross margins. Political uncertainty, significant PKR devaluation and hike in
borrowing cost hampered the profit margins in FY 2019. Gross profit margin started to fall
from FY 2017 due to increase in cost of production. In FY 2019, the Company gross profit
margin dropped due to abnormal rupee devaluation, decrease in national consumption and
other macro-economic factors including declined GDP. The trend continued in FY 2020 as

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well, the economy of the country shrank massively, and eruption of COVID-19 pandemic
further worsened the situation.

MARKET VALUE RATIOS

10.00
8.91
9.00
7.92 8.24
8.00
7.00
6.13
6.00 5.96 5.54 5.77 5.28
5.04 5.02
5.00 5.230
4.6 4.60

4.00
3.00 2.86
2.00 1.77
1.64
1.00 1.21 1.10
0.72 0.70
0.00
2016 2017 2018 2019 2020

ENGRO-P/E FATIMA-P/E FATIMA-M/B ENGRO-M/B

The P/E ratio shows what the market is willing to pay today for a stock based on its
past or future earnings. A high P/E could mean that a stock's price is high relative to earnings
and possibly overvalued. Conversely, a low P/E might indicate that the current stock price is
low relative to earnings.

In the case of EFERT, the P/E ratio indicates the declining trend and except in FY
2017 whereas in FATF FY 2016, it was the point where maximum P/E ratio was achieved
and then its ratios continue to decline. Certain industries have high PE ratios because
investors have higher earnings growth expectations. Companies that establish new trends or
develop innovative productivity solutions may have high PE ratios because investors are
willing to pay a premium for potentially high earnings growth. And comparatively, EFERT
has lower P/E ratio as compared to FATF.

On the other hand, Market Book value ratio of Engro is showing the declining trend
whereas FATF shows the mixed trend that is primarily affecting due to unstable stock price
of till FY 2018 but during pandemic and other economic factors, FATF performed
marvelously and shows a tremendous growth and reach to the top MB ratio throughout the
period that is 8.24 time. And its comparatively better than EFERT. It also indicates that the
market value of FATF is better.

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COVID 19 IMPACT OVER RATIOS AND COMPANY

OPERATIONS
ENGRO FERTILIZER LTD.
The global COVID-19 pandemic poses a significant challenge to not only global, but
also national economic prosperity. As one of Pakistan’s most responsible companies, Engro
Fertilizers remains committed to the alleviation of adverse impact of this global pandemic on
our nation, in particular the agriculture sector which remains the largest driver of employment
in our country. The Company hereby announces a further reduction in urea prices by Rs
240/bag. This additional price cut would result in an overall price reduction of Rs 400 per bag
since the beginning of the year. With the outbreak of Covid-19, Pakistan’s farmers are facing
unprecedented challenges. In this difficult time, Engro Fertilizers stands firm with the people
of Pakistan and the Government to prioritize the sustainability of agriculture sector to ensure
our nation’s food security. In this pursuit, the Company has made an additional price
reduction to support our valued farmers in these trying times.
Since we can see in the above ratio calculation, that how the profitability ratios of EFERT
have decline during the FY 2020; both profitability ratios ROE & ROA has decline during
the pandemic and decline in the GP causing the impact over the EPS of EFERT through
retained earnings of FY 2020.

FATIMA FERTILIZER
Despite multiple challenges faced by the FATF during the year due to COVID-19 and
along with the locust attack which emerged as a key risk factor for the agriculture sector,
FATF achieved the highest ever sales volume of 1.87 million MT in 2020. On a year-on-year
basis, sales volume increased by 1.8% as compared to last year. As a result of steadiness in
overall sales volumes, despite some price uncertainties in the first half of the year, the
Company managed to deliver sales revenue of Rs 71.27 billion showing a decline of
approximately 5%, compared to sales revenue of Rs 74.96 billion in the year 2019. Since we
can see that the overall profitability ratios, debt management ratios and market value ratio of
FATF is slightly greater and more consistent th EFERT. We also see that the realized rate of
return 0.23% and beta coefficient of FATF is 0.68, greater in FY 2020 by EFERT. And FATF
has performed overall better in outbreak of pandemic.

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CONCLUSION

Both the companies; EFERT and FATF has performed assuredly throughout the time
period of FY 2016 to FY 2020. This conclusion is based upon the calculations and reference,
that might be differ from actual ingredients. As we can see in calculation of Stock beta, A
beta value that is less than 1.0 means that the security is theoretically less volatile than the
market. Including this stock in a portfolio makes it less risky than the same portfolio without
the stock. we can see it clearly that on average the Stock beta of FATF is relatively greater,
that is (β=0.664) whereas the stock beta of EFERT is lower on average, that is (β=0.63). since
the value β of FATF is almost nearly to the ideal volatility rate (β=1), since the stock price
and rate are also be affected due to maximum β of FATF and the average stock return of FY
2016 to FY 2020 is -0.6%, whereas EFERT is -0.12%. so preferable, it may happen that
investors eyes will be attracted to FATF stock more than EFERT.

Now if we put eyes over the ratio analysis, its clearly picturized and interpreted that
the FATF’s ratios are relatively better than EFERT i.e., Debt Management, Market Value and
Liquidity ratios of FATF is on better side. Except Profitability ratio, because its might be the
reason for FATF that excessive operating costs, inadequate revenue, or, in most cases, a
combination of both. Inefficient operating practices, which result in poor utilization,
excessive fleet strength, and overstaffing, are common causes of excessive cost in countries
like Pakistan and specially when the market is competitive.

During the pandemic (COVID 19), it was world outbreak and slowed down the
economy of the whole world but on the same side it was creating challenges for every sector
industrial production. Both the agricultural sector has faced several challengers mentioned in
economic factors and impacts of COVID 19.
Since the we came here over the conclusion that FATF and EFERT, both performed
well and achieved their benchmarks over the years and will do further. But FATF, has
performed slightly more efficiently than EFERT, in several aspect and moreover the gold
points that FATF has higher stock market, greater rate of returns, and efficient ratios. So, we
suggest investor to invest their capital more in FATF, as it might provide them more return
in future.

INVESTMENT ANALYSIS & PORTFOLIO MANAGEMENT

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REFRENCES

https://www.engrofertilizers.com/themes/engro/documents/EFert_-_Company_info.pdf

https://www.engro.com/engro-fertilizers/

http://fatima-group.com/ffcl/page.php/vision-and-mission-ffcl

https://www.investing.com/equities/engro-fertilizers-ltd-historical-data

https://www.investing.com/equities/fatima-fertilz-historical-data

https://www.engro.com/investor-relations/financial-reports/

https://www.marketscreener.com/quote/stock/ENGRO-FERTILIZERS-LIMITED-
16337606/financials/

http://fatima-group.com/updata/files/files/211_20210405123756.pdf

https://www.investopedia.com/investing/beta-know-risk/

https://www.nasdaq.com/glossary/p/portfolio-beta

https://www.engrofertilizers.com/trust/press-release-detail/2020/engro-fertilizers-reduces-
urea-prices-by-a-further-rs-240-to-ensure-national-food-security-and-support-the-farmers-of-
pakistan

INVESTMENT ANALYSIS & PORTFOLIO MANAGEMENT