Pakistan State Oil Ltd (PSO) held its analyst briefing today to discuss its financial results for 9MFY25:

Recalled here, the company’s net sales declined by 13% year-over-year (YoY) to PKR 2,336 billion, impacted by lower fuel prices and a 7% drop in delivered volumes to 5.3 million tons.

– Unconsolidated net profit rose 14% YoY to PKR 15.3 billion, aided by lower finance costs. However, consolidated profitability declined by 42% YoY to PKR 10.7 billion due to falling oil prices.

– PSO commissioned 67 new retail outlets, increasing its total to 3,641.

Future initiatives include electric vehicle (EV) charging stations, blue LPG, and rehabilitation of the storage terminal. Management is focused on clearing existing loans before exploring new investments.

There is a halt on accruing receivables from SNGP, as per a Ministry of Petroleum agreement, with SNGPL receivables at PKR 323 billion.

The OMC market remains competitive, with PSO opting not to match discounts from smaller operators, instead aiming for organic market share growth.

– Concerns remain over sales tax recovery, and no OMC margin revisions are expected soon. A proposal for margin revision is pending approval.

Growth in MS/HSD industry volumes is projected at 3-5% for FY26, with petroleum smuggling estimated at 2,000 to 4,000 tons per day.

– EV charger costs range from USD 20,000 to 25,000, with expected gross margins of 15-20%.

– We maintain a ‘BUY’ rating with a target price of PKR 729 per share, reflecting a 95% upside potential. This outlook is supported by improving liquidity, expected growth in OMC volumes, and potential margin increases at the refinery subsidiary (PRL), which will benefit the consolidated bottom line.

Courtesy – AKD Research