Karachi: Pakistan State Oil Ltd. (PSO) announced a substantial increase in its earnings for the first quarter of fiscal year 2026, posting a Profit after Tax (PAT) of PkR9.4 billion, marking a 136% year-on-year rise. The growth is attributed to inventory gains and a notable decrease in finance costs.

The company's net sales stood at PkR737 billion, reflecting a 6% year-on-year decline. This reduction was primarily due to flat oil marketing company (OMC) offtakes and decreased revenue from the RLNG segment.

PSO's total offtakes experienced a slight increase of 0.2% year-on-year, reaching 1.63 million tons. Specifically, MS and HSD offtakes rose by 1% and 6% year-on-year, respectively.

The company's gross profitability increased by 17% year-on-year to PkR30 billion. Inventory gains were estimated at PkR8.6 billion during the quarter.

Other income for PSO increased by 40% year-on-year to PkR4.5 billion, despite a 35% decline on a quarter-on-quarter basis. This was attributed to the utilization of previously owned short-term investments to reduce trade payables, which dropped to PkR300 billion.

Finance costs for the company saw a significant decline of 43% year-on-year, reaching PkR6.0 billion, the lowest in 12 quarters. This was driven by a reduction in short-term borrowings.

Trade receivables continued to decrease, ending the period at PkR426 billion, a reduction of 9% compared to the same period last year. The gas receivables collection ratio was reported at 105%.

AKD Securities Limited maintains a 'Buy' rating for PSO stock, with a price target of PkR760 per share by June 2026, indicating an upside potential of 65% from the last closing price. The positive outlook is supported by an improved liquidity situation, anticipated growth in OMC volumes, CPI-linked OMC margins, and the upgradation of the refinery subsidiary.