PPL – 1HFY22 earnings expected at PkR12.8/sh: We expect Pakistan Petroleum Limited (PPL) to announce profitability of PkR34.9bn (EPS: PkR12.8) during 1HFY22, representing a jump of ~33%YoY. Along with the result, the company is also expected to announce a semi annual payout of PkR1.5/sh.

The company has benefitted from hefty currency depreciation and rise in international crude oil prices which has helped mask a hefty decline in production of both gas (down ~10%YoY) and oil (down ~15%YoY). As for the profitability during 2QFY22 alone, the earnings are likely to clock in at PkR18bn (EPS: PkR6.6), up 6%QoQ. The growth in profitability on sequential basis comes on the back of flattish production, 6.1% in currency depreciation and 8.9% jump in international crude oil prices.

We have a buy call on the scrip with a TP of PkR155/sh. The scrip trades at a forward PER of 3.8x.

Courtesy- AKD Research