Pakistan Petroleum Limited (PPL) reported 2QFY26 financial results earlier today, with consolidated earnings clocking in at PkR20bn for the second quarter (EPS: PkR7.40), down 26% YoY — slightly below expectations. Alongside the result, the company also announced a half-yearly cash dividend of PkR2.0/sh, taking cumulative cash payout to PkR4.0/sh for the first half (payout ratio: 27%), according to a report by AKD Research.

·        Net Sales stood at PkR61.8bn during 2QFY26, up 1%YoY. Regarding hydrocarbon production, PPL’s estimated oil and gas output clocked in at 11.1kbpd (up 4%YoY) and 554mmcfd (down 1%YoY) as per PPIS data.

·        Operating expenses for the quarter amounted PkR16.5bn, marking a 32%YoY increase. Additionally, exploration expenses totaled PkR1.4bn for 2Q (down 23%YoY).

·        Company’s trade receivables ended the period at PkR600bn, up 4%YoY/1%QoQ from PkR576bn in SPLY. Gas revenue collection for 2QFY26 is estimated at 93%, compared to 96% in the corresponding period last year.

·        Other income declined to PkR3.7bn, down 57%YoY. The decline is possibly due to lower investment yields alongside reduced cash and short-term investment balances in the outgoing quarter (PkR93.8bn/PkR34 per share during 2QFY26, down 35% YoY), as the company paid off the lease extension bonus on Sui D&PL (PkR50bn as of Mar’25) during 4QFY25.

·        Effective tax rate for 2QFY26 stood at 37%, compared to 26%/35% in SPLY/1QFY26, respectively.

·        We have a ‘BUY’ stance on PPL with a Dec’26 target price of PkR412/sh, alongside a DY of 4.6% during the same period. Our outlook is strengthened on the back of: i) higher future exploration prospects given the improving liquidity situation, ii) 8.33% stake in the highly prospective Reko Diq Mining Project, and iii) offshore working interests in Abu Dhabi Block-5, along with consortium partners and iv) improvement in cash payouts.

https://research.akdsl.com/639065907608740422.pdf

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