PKR appreciation to reduce exchange losses of PIBTL – Upward trajectory in script price to be seen.

According to Spectrum Research, the strengthening of PKR against the USD by 4% since Jun’23 is poised to mitigate the foreign exchange losses, as the PIBTL holds foreign currency-denominated loans of ~USD18.4mn. Moreover, the constrained coal trade from Afghanistan has encouraged an upswing in coal imports via sea routes; this development is anticipated to yield advantages for PIBTL.

The capacity utilisation has recovered to 67% in Oct’23 from 43% in 9MFY23, indicating a strong volume ahead. Moreover, the EBITDA margins remain healthy at 41% in FY22. The company expected to save PKR222mn on USD devaluation as exchange gains but incurred a loss of PKR99mn in revenue as it is linked with USD. During 9MFY23, the company reported a net loss after taxation of PKR2,584mn, predominantly attributed to the adverse effects of currency devaluation on its USD-denominated foreign loans.

In 9MFY23, the company has already incurred PKR2.2bn for exchange losses and PKR1.293bn as financial charges posed by PKR devaluation and rising interest rates.

The company had secured loans from IFC of USD26.5mn at a markup rate of 6M LIBOR plus 5% per annum. The company also borrowed USD26.2mn from the OFID), with the same markup rate. However, it is worth noting that the company charges post-handling fees in USD (Coal USD7.05/ton); the depreciation of the USD against PKR has reduced the company’s revenues.

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