Karachi, August 16, 2022 (PPI-OT): POL: FY22 Result Review – Earnings surprise on lower-than-expected taxation

Pakistan Oilfields Limited (POL) reported its earnings earlier today, announcing NPAT of PkR25,935mn for FY22, higher by 95% compared to the same period last year. For the final quarter, the company reported earnings of PkR8,439mn (EPS: PkR29.73), higher by 1.28xYoY and 28%QoQ. The result was higher than our expectations on account of lower-than-expected taxation charge during the final quarter. Along with the result, the company reported a cash dividend of PkR50/sh in addition to the PkR20/sh announced earlier.

POL reported net sales of PkR51,945mn for FY22, higher by 44%YoY. POL’s topline grew by 74%YoY/12%QoQ to PkR14,943mn in 4QFY22, driven by higher crude oil prices, along with a weaker PkR against the USD during the period.

The company reported finance costs of PkR 5,549mn for FY22, higher by 20.4xYoY. For 4QFY22, the company reported finance costs of PkR2,363mn, higher by 2.5xYoY and 2xQoQ.

POL’s PBT clocked in at PkR36,987mn in FY22, higher by 80%YoY, majorly driven by the growth in the company’s topline, along with a relatively subdued increase in operating costs. For the quarter, the company reported PBT of PkR12,164mn, higher by 97%YoY and 20%QoQ.

The company reported an effective tax rate of 25.1% for the final quarter, compared to 30.3% in the earlier quarter. Our estimates incorporated a higher tax rate on account of super tax.

We have a Buy rating on the stock with a Target Price of PkR570/sh, posing an upside potential of 35%. The stock also offers a dividend yield of 17%.