Karachi: Pakistan State Oil Ltd (PSO), the country's leading oil marketing company, held an analyst briefing today to present its financial results for the nine months ending in fiscal year 2025. Despite a drop in net sales, the company reported an increase in unconsolidated net profit, attributing the growth to reduced finance costs and increased other income.
PSO's net sales for the period amounted to PkR2,336 billion, reflecting a 13% year-on-year decrease. This decline was primarily due to lower average fuel prices and a 7% reduction in delivered volumes, which fell to 5.3 million tons. Nonetheless, the company's unconsolidated net profit saw a 14% increase year-on-year, rising to PkR15.3 billion from PkR13.4 billion in the same period last year.
On a consolidated basis, PSO's profitability faced a 42% year-on-year decline, dropping to PkR10.7 billion. The decline was attributed to falling oil prices and weak refinery margins impacting the overall earnings.
In terms of expansion, PSO commissioned 67 new retail outlets, bringing its total to 3,641 across the country. The company has also outlined future initiatives, including the introduction of electric vehicle charging stations, blue LPG, and the rehabilitation of storage terminals. Additionally, PSO plans to invest in its refinery subsidiary, PRL, and maintain its leadership in the aviation fuel segment.
The company did not comment on the government's circular debt clearance plan but mentioned ongoing discussions at the ministry level. It emphasized its priority to settle existing loans, which would allow exploration of new investment opportunities once liquidity improves.
PSO has ceased accruing further receivables from SNGP under an agreement with the Ministry of Petroleum, with RLNG payments reportedly flowing smoothly. Principal receivables from SNGPL are stated to be PkR323 billion, with LPS receivables exceeding PkR200 billion.
In a competitive oil marketing industry, PSO has opted not to match discounts offered by smaller operators but seeks to grow market share organically. The company expressed concerns about ongoing sales tax issues but noted that a recent price revision addressed ongoing losses from sales tax recovery.
No revisions in oil marketing company margins are expected in the upcoming pricing cycle, despite recent oil price increases. A proposal for margin revision has been submitted and is awaiting approval.
Looking ahead, PSO projects a 3-5% growth in motor spirit and high-speed diesel industry volumes for FY26. The company estimates petroleum smuggling at 2,000 to 4,000 tons per day. In the EV charging sector, PSO anticipates gross margins of 15-20%, with procurement costs for a single charger ranging from US$20,000 to US$25,000.
AKD Securities Limited maintains a 'BUY' rating on PSO stock, with a target price of PkR729 per share by December 2025, indicating a 95% upside potential. This optimism is based on strengthening liquidity, anticipated growth in oil marketing company volumes, potential increases in margins, and the expected benefits from upgrading the refinery subsidiary.