OMC Sector is set to post strong earnings growth, what investors should know?

Oil Marketing Companies (OMCs) like PSO and APL are expected to post solid results for the April–June 2025 quarter (4QFY25). According to market forecasts, profits for both companies could jump 41% year-on-year (YoY) and 16% quarter-on-quarter (QoQ), making it the strongest quarter since FY22.

Let’s break it down

Why earnings are expected to jump?

The profit growth is likely due to:

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• Higher fuel sales volumes during the quarter
• Lower finance costs, thanks to reduced borrowing and interest rates
• Lower taxes compared to the same period last year

Combined, these factors are expected to give a strong boost to the bottom line of both companies.

Fuel sales hit a high

The OMC sector sold about 4.6 million tons of fuel in 4QFY25, up 41% YoY and 16% QoQ. This is the highest quarterly sales since 4QFY22.

• PSO saw its volumes rise by 14% YoY
• APL reported a 17% YoY increase

However, for the full year, volumes were slightly down due to weaker sales in earlier quarters.

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PSO’s receivables finally coming down

One of the big positives for PSO is the decline in trade receivables, now at the lowest level since June 2022, standing at PKR 454 billion. This has improved cash flow and helped the company reduce short-term debt.

• PSO’s finance costs are expected to go down 32% YoY
• Company’s cash flow from operations (CFO) is expected at PKR 74bn, up 5.5x YoY
• Working capital ratios are also improving, showing stronger financial health

Investment view

Analysts are optimistic about both PSO and APL going forward. Why?

1. Fuel margins (regulated by the government) are expected to increase in FY26
2. Economic recovery will likely boost fuel demand
3. Resolution of circular debt could further improve PSO’s position

Target Prices (Dec’25):

• PSO: PKR 729/share | Forward P/E: 6.0x | Dividend Yield: 5.2%
• APL: PKR 825/share | Forward P/E: 7.5x | Dividend Yield: 6.2%

With improved volumes, lower costs, and better financials, PSO and APL are heading toward a strong quarterly showing in 4QFY25. For investors, these are two key stocks to keep an eye on, especially with more gains expected in FY26.

Source: AKD Securities

⚠️ This post reflects the author’s personal opinion and is for informational purposes only. It does not constitute financial advice. Investing involves risk and should be done independently. Read full disclaimer →