Mari Petroleum Company Limited (MARI) reported its 4QFY23 earnings earlier today, wherein the company posted Profit After Tax (PAT) of PkR 15.84bn (EPS: PkR118.7) for the quarter, changing by –4%/183% QoQ/YoY — largely in-line with our estimates of EPS: PkR124.3/sh. For the full year, company posted PAT of PkR56.13bn (EPS: PkR420.7), up 70%YoY vs. PkR33.06bn (EPS: PkR247.8) during FY22. Along with the result, the company posted a final cash dividend of PkR58/sh, taking total payout for the year to PkR147/sh vs. PkR124/sh during FY22.

· Net sales stood at PkR46.9bn for the 4QFY23 (up by 24%QoQ), the highest quarterly topline in the company’s history. The said increase is majorly due i) higher offtakes from the MARI field (up 5%QoQ/16%YoY), ii) Higher avg. PkR/USD parity (up 10%QoQ) alongside higher well-head prices.

· On the non-operating front, MARI’s opex stood at PkR10.9bn (up 65%QoQ), possibly due to commissioning of GTH capacity during the period alongside year end remuneration/salary adjustments. On the exploration front, exploration expenses surged to PkR6.48bn (up 70%QoQ) during the period, possibly due to drilling/development activities in Mari Ghazij and Mari 122H wells, among other prospective activities.

· Finance income dropped considerably during the period, clocking in at PkR2.2bn (down 52%QoQ) amid absence of FX gains compared to the previous periods.

· On the taxation front, effective tax clocked in at 37% during the quarter (vs. 33%/55% during 3QFY23/SPLY. The surge is possibly due to super tax’s retrospective application.

· Dividend payout of PkR58/sh remained below expectations, possibly due to cash constraints on account of increased sales towards gas utility companies compared to last year. To note, MARI delivered approximately 125mmcfd towards SNGPL during June’23 amidst recent SGPC commissioning and unutilized offtakes of fertilizer customers. Overall, MARI remains our top pick from the sector, with a June’24 target price of PkR2700/sh on the stock, providing an upside of 67% from last close.

Courtesy – AKD Research