KARACHI: Pakistan State Oil Ltd. (PSO) posted impressive financial results for the second quarter of fiscal year 2025, reporting a significant profit after tax (PAT) of PKR7.2 billion. This marks a substantial improvement from a loss after tax (LAT) of PKR14.1 billion during the same period last year. Despite the positive earnings, the company slightly missed earnings projections.

According to a statement by AKD Securities Limited, PSO's net sales for the quarter were PKR838 billion, representing an 8% decline year-on-year. This decrease was attributed to lower fuel prices compared to the same period last year; however, the company achieved higher oil marketing company (OMC) offtakes of 2.1 million tons, reflecting a 7% increase year-on-year.

Gross profitability for the quarter improved significantly to PKR25 billion, up from a gross loss of PKR3.2 billion in the same quarter last year. The improvement was largely due to higher average regulated margins and the absence of inventory losses, which had impacted the second quarter of the previous fiscal year.

The company's other income declined by 9% year-on-year to PKR7.1 billion, yet showed a substantial 118% increase on a quarter-on-quarter basis. This rise was attributed to higher returns on short-term investments and the recognition of income from past-due customer receipts.

Finance costs for PSO saw a notable reduction, declining by 42% year-on-year to PKR8.8 billion. The decrease was primarily driven by a reduction in short-term borrowings and the effects of declining interest rates. The effective tax rate for the quarter was recorded at 53%, compared to 13% in the same period last year.

Despite the company's strong financial performance, it did not declare a half-yearly dividend, contrary to expectations. AKD Securities Limited maintains a 'BUY' rating on PSO's stock, with a target price of PKR729 per share by December 2025, indicating a potential 100% increase from its last closing value.