PhosAgro PJSC (MOEX: PHOR) is one of the world’s leading producers of phosphate-based fertilizers, with a vertically integrated business model and access to high-quality apatite-nepheline ore. The company benefits from strong global demand for fertilizers, driven by food security concerns and limited supply growth. Despite Western sanctions on Russia, PhosAgro has not been directly sanctioned and continues to export, generating robust free cash flow. The stock trades at a forward P/E of ~5x and offers a dividend yield of over 10%, supported by a policy of paying out 100% of free cash flow. Key catalysts include: (1) margin expansion from lower natural gas costs and higher phosphate prices, (2) potential dividend increases as capex normalizes, and (3) continued strong demand from India and Brazil. Risks include sanctions escalation, currency volatility, and global fertilizer price declines. The balance sheet is solid with low net debt/EBITDA of ~0.5x. This pick adds diversification to the portfolio, which currently has exposure to oil, steel, healthcare, and retail.
Risk Disclaimer: Investing in Russian equities carries significant risks, including sanctions, currency controls, and limited liquidity. This is not financial advice. Do your own due diligence.