Engro Polymer & Chemicals Ltd. (EPCL), a key subsidiary of the Engro Group, is expected to post a loss of Rs576 million (loss per share: Rs0.6) in the first quarter of calendar year 2025, narrowing from a loss of Rs901 million (LPS: Rs1.2) in the same period last year. The smaller loss is supported by higher product volumes and improved pricing in caustic soda, though elevated energy costs continue to dampen margins. According to a report by AKD Research.
Analysts at AKD Securities project gross margins to hold steady year-on-year at 6.4%, as higher average gas prices effectively cancel out the gains from increased sales volumes. Gas prices for captive power jumped to Rs3,500/mmbtu in February, followed by a fresh levy of Rs791/mmbtu from March—both of which tightened the cost environment.
On the international front, pricing pressure also took a toll. PVC-ethylene core margins declined 7% YoY to US$305/ton, and were down 15% compared to the previous quarter. Average PVC prices during the quarter stood at US$748/ton, reflecting a 5% YoY decline. These figures highlight sluggish global demand and growing supply, further complicated by trade uncertainties such as potential Trump-era tariffs and Indian anti-dumping measures.
Despite the margin pressure, revenue is forecasted to rise 8% YoY to Rs17.9 billion, thanks to a recovery in construction and textile demand. EPCL’s PVC and chlor-alkali sales are expected at 50,000 and 21,000 tons respectively, showing solid growth of 11% and 26% YoY.
Still, the cost of goods sold climbed in step with revenue, capping gross profit growth at a modest 9%. The sharp QoQ drop in gross profit—down 61% from 4QCY24—was largely due to the absence of one-off depreciation reversals seen in the previous quarter.
Finance costs are projected at Rs1.6 billion, down 4% YoY, helped by a drop in benchmark interest rates despite higher borrowing levels. On the tax front, the company is expected to receive a credit of Rs384 million.
AKD Securities has maintained its “SELL” rating on EPCL, with a December 2025 target price of Rs30 per share. The brokerage warns that sustained pressure from energy costs and persistently weak core margins could continue to limit earnings recovery.
While higher volumes signal some demand-side optimism, Engro Polymer’s near-term profitability outlook remains restrained by rising input costs and margin volatility.
