Pakistan State Oil (PSO) is expected to announce its 3QFY24E financial result in late April, where we expect the company to post a PAT of PkR1.96bn (EPS: PkR4.17). Like most players in the sectors, PSO is also expected to incur gains on inventory amidst increasing ex-refinery prices, majorly due to higher international gasoline/gasoil prices resulting from tensions in the Middle East. Note that MS/HSD prices have increased by 6.6%/4.3% from their 2QFY24 quarter closings. For this reason, we expect the OMC to record inventory gains of ~PkR0.95bn (PkR2.0/sh) for 3QFY24E, subsequently resulting in gross margins for the period to end at 2.9% (vs. –ve 0.4% in the quarter before).

On the topline front, company’s revenue is expected to clock in at PkR853bn, changing by -6%/+5% QoQ/YoY, as total POL offtakes for the quarter stood abysmally low at 1.82mn tons (down 6% QoQ). On the RLNG front, PSO’s average DES price for the quarter stood at US$9.62/mmbtu vs. US$10.35/mmbtu in the quarter before, while the quantity delivered stood at 966 MMCFD (up 17%QoQ), taking topline from the RLNG segment to clock in at PkR254bn (higher by 9%/1% QoQ/YoY). Overall, we have a Buy rating on the stock, with a Dec’24 TP of PkR260/sh, representing an upside potential of 44.5% from last close.

Courtes- AKD Research