· Pakistan State Oil (PSO) is expected to announce its 2QFY22 result on 11th Feb’22 where we expect the company to post PAT of PkR10.8bn (EPS: PkR22.96), increasing by 146%YoY as low inventory gains kept the base low

· Company’s revenue is expected to increase by 136%YoY as retail prices increase, coupled with an increase in dispatches which stood at 13.5%YoY. For the retail fuel segment, the company’s volumes increased by 13%YoY.

· PSO has remained in the limelight recently, with the stock outperforming the KSE-100 index by 2ppts in the last two weeks as oil prices remain elevated, increasing expectations of significant inventory gains. Another factor which contributed to the cause was IMF requesting government to take steps to curtail circular debt of not only power sector, but gas too.

· Overall, we maintain our Buy stance on the scrip with our TP of PkR250.4/sh, providing an upside of 29% premised upon the company continuing to improve its retail infrastructure, which has resulted in the company’s retail fuel market share increasing to 47% for 7MFY22 against 44% for 7MFY21.

Courtesy – AKD Research