Pakistan OMCs – 2QFY25 Result previews: Strong diesel sales to power OMC profits  

We expect the IMS OMC universe (PSO and APL) to report 2QFY25f NPAT of PKR11.9bn, rising 87% sequentially. The substantial increase is primarily led by the absence of inventory losses compared to the previous quarter and the improvement in volumetric sales. 

Overall, industry volumes depicted meaningful growth, up by 18% QoQ and 12% YoY. In line with the industry, our universe sales grew by 25% QoQ and 5% YoY. This was largely driven by improved diesel sales, likely due to control over diesel smuggling from Iran.

§  Our cluster’s margins are expected to improve marginally by 0.3ppt QoQ to c.3.6%. This is primarily due to expectations of inventory gains vs. losses reported during the previous quarter. 

The sharp rebound in earnings expected

IMS OMC universe (PSO and APL) is expected to post a cumulative NPAT of PKR11.9bn for 2QFY25, up 87% QoQ, driven by a sharp increase in volumetric sales and improved margins due to the absence of inventory losses. Net revenues for our coverage cluster is estimated at PKR987bn, a 10% QoQ rise, with volumes growing by 25% QoQ to 2.4mn MT. This growth was primarily led by HSD sales, which surged 58% QoQ to 1.2mn MT, supported by a crackdown on smuggling, further aided by harsh weather at the Pakistan-Iran border. Petrol sales also rose by 7% QoQ to 1.0mn MT. We expect our universe GMs to improve by 0.3ppt QoQ to 3.6%, mainly due to absence of inventory losses during the quarter. This will bring 1HFY25 NPAT to PKR 18.2bn, up 17% YoY.

PSO: Market share recovery poised to propel earnings

Pakistan State Oil (PSO) is projected to report a 2QFY25 NPAT of PKR9.0bn (EPS: PKR19.22), reflecting a robust 2.3x sequential increase driven by substantial growth in volumetric sales and inventory gains. Net revenues are estimated at PKR870bn, marking a 4% YoY decline but a 10% QoQ increase, primarily attributed to a 27% rise in volumetric sales to 2.1mn MT. HSD sales surged by 62% QoQ and 7% YoY, while MS volumes grew by 8% QoQ and 7% YoY, boosting PSO’s market share in the white oil segment by 5ppt to 47%; though it remains below the three-year historical average of 49%. GMs are expected to improve by 0.3ppt to 3.6%, supported by expected inventory gains of PKR3bn (c.PKR4.0/sh after tax). PSO remains our top pick in the sector, trading at a 10% discount to the broader market, with recent sector reforms easing cash flow concerns.

APL: Strong volumetric growth to drive profits

Attock Petroleum Ltd. (APL) is expected to report a NPAT of PKR2.9bn (EPS: PKR23.06) for 2QFY25, marking a solid growth of 20% QoQ and 13% YoY. This robust performance is attributed to strong volumetric growth and efficient inventory management, which capitalized on rising oil prices and is likely to result in inventory gains of PKR0.8bn (c.PKR4.0/sh after tax). Net revenues are projected at PKR116bn, up 3% QoQ, supported by an 11% rise in volumetric sales. APL’s HSD volumes surge 38% QoQ, while MS volumes remained steady at 157,000 MT. However, ongoing monetary easing is expected to lower finance income by 20% QoQ to PKR1.8bn. Along with the result, we expect APL to announce a quarterly dividend of PKR15.0/sh.

Courtesy-  IMS Research

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