KARACHI: Engro Holdings sees strong potential in Pakistan’s independent telecom tower sector and may explore new opportunities when timing and partnerships align.
A recent report by Topline Securities highlighted a meeting with Engro management, including CFO Farooq Barkat Ali and GM Group Portfolio Performance Management Usman Hassan. The company is optimistic about the future of its telecom and infrastructure ventures.
Revenue and profit growth
Engro Corporation has posted impressive results over the past six years. Its consolidated revenue rose at a 21 percent compound annual growth rate (CAGR) from 2018 to 2024, reaching Rs540 billion (US$1.9 billion). Net profit grew at a 19 percent CAGR, hitting Rs67 billion (US$0.2 billion) in the same period.
Recently, Engro completed a US$563 million deal with VEON Group Pakistan, becoming the 16th largest independent telecom company globally. The management believes the tower business will deliver long-term value. Initial focus remains on Deodar’s capital expenditure, solarisation of towers, and debt servicing. Engro Connect is also expected to provide stable medium- to long-term cash flows.
Telecom and tower outlook
Management noted strong upside in tenancy growth at Deodar. Currently, Jazz has only 3,000 shared towers out of its 10,500 total, achieved with limited marketing. Over the next few years, Deodar’s EBITDA margins are expected to surpass those of Engro Enfrashare.
The company does not view satellite services as a major competitor, noting that cost barriers limit satellite use in areas already served by tower networks.
Fertiliser, power, and energy businesses
Engro’s fertiliser arm remains stable despite recent floods, with demand expected to dip by only 4–5 percent. Fertiliser inventory has risen to 1.2 million tons, and exports may be allowed after Q4 2025 to ease surplus stock.
At Engro Powergen Thar, the company has collected 93 percent of billed receivables since inception. Current outstanding receivables stand at Rs40–45 billion, with recovery rates at 98–99 percent, ensuring cash flow strength.
On the energy side, LNG renegotiations between Qatar and Pakistan will not impact Engro’s terminal, which operates under a fixed “take-or-pay” model. Discussions are ongoing about the future of the Vopak terminal, with the current contract expiring next year.
Mining expansion
Sindh Engro Coal Mining Company (SECMC) is advancing with Phase 3 expansion, aiming to raise capacity from 7.6 million tons to 11.6 million tons by 2026. Longer-term plans include scaling production up to 20 million tons.
Market outlook
ENGROH shares are trading at 2025E and 2026F price-to-earnings multiples of 5.2x and 6.7x, reflecting its growth potential across multiple sectors.
In other news read about: Engro Fertilizers Achieves Record-Breaking Profit in 2023
