Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings for My Petroleum (Pvt.) Limited, emphasizing the company's stable outlook despite prevailing challenges in Pakistan's energy sector. The ratings, released on September 11, 2025, affirm a long-term rating of BBB+ and a short-term rating of A2, both unchanged from the previous year.
The decision to maintain these ratings reflects My Petroleum's resilient operational framework, supported by its sponsors' established presence in the oil marketing sector. Despite an expansion to 81 fuel stations, the company holds a modest market share of approximately 0.4%, with revenue primarily driven by petroleum product sales.
In fiscal year 2025, Pakistan's petroleum product consumption rose by approximately 7% year-over-year, totaling around 16.3 million metric tonnes. This increase was largely attributed to a surge in motor vehicle sales, with Motor Spirit (MS) leading the market in volume. However, the sector faces potential setbacks due to recent flooding, which could affect demand, cash flows, and liquidity.
My Petroleum's revenue has faced a decline due to a 19% decrease in sales volume, particularly with lower High-Speed Diesel (HSD) sales. Despite this, the company managed to improve its margins by procuring petroleum products at reduced prices. The company’s reliance on imports exposes it to significant exchange rate risks, impacting profitability and increasing business risk.
Financially, My Petroleum maintains an adequate risk profile, managing working capital through a mix of debt and supplier credit. While leverage is stretched, there has been a slight improvement in coverage ratios. The balance sheet, however, reflects a weak borrowing cushion, prompting management to align leverage indicators with the overall risk profile.
PACRA's rating underscores the company's capacity to sustain operations, considering ongoing developments such as equity injections and retail network expansion. The company's financial flexibility, supported by its sponsors through subordinated loans, is a positive aspect for future stability. Sustainable profits and robust financial metrics in working capital and coverage remain crucial for maintaining the current rating.