Karachi: Pakistan State Oil Ltd (PSO) reported its financial results for the first quarter of fiscal year 2025 today, with a profit after tax (PAT) of PkR4.0 billion, significantly below the PkR21.9 billion recorded in the same period last year. Despite the sharp decline, the earnings per share (EPS) of PkR8.46 surpassed analyst expectations, mainly due to lower inventory losses than anticipated.

According to AKD Securities Limited, PSO’s topline for 1QFY25 was PkR787 billion, down 14% year-over-year, impacted by falling fuel prices and a 15% drop in Petroleum, Oil, and Lubricants (POL) offtakes, which totaled 1.62 million tons. Motor Spirit (MS) and High-Speed Diesel (HSD) sales volumes decreased by 19% and 15% respectively, with ending quarter prices for MS and HSD at PkR249 and PkR250, showing declines of 4% and 7% from the end of the previous fiscal year.

Gross margins for the quarter were reported at 3.3%, compared to 6.4% in the same period last year and 1.9% in the fourth quarter of FY24. The finance cost remained relatively stable year-over-year at PkR10.4 billion but showed a 13% decrease from the previous quarter, likely due to reduced short-term borrowings and a decline in the Karachi Inter-Bank Offered Rate (KIBOR), which fell by 527 basis points.

Other income for the quarter was PkR3.2 billion, consistent with the previous year. The effective tax rate for the quarter was recorded at 66%, compared to 74% in the last quarter and 49% year-over-year.

AKD Securities maintains a ‘BUY’ recommendation on PSO stock, with a target price of PkR290 per share by June 2025, indicating a potential upside of 29% from the last closing price.