{"id":10009,"date":"2025-07-18T15:42:24","date_gmt":"2025-07-18T10:42:24","guid":{"rendered":"https:\/\/ksestocks.com\/blog\/?p=10009"},"modified":"2025-07-18T15:42:26","modified_gmt":"2025-07-18T10:42:26","slug":"omc-sector-is-set-to-post-strong-earnings-growth-what-investors-should-know","status":"publish","type":"post","link":"https:\/\/ksestocks.com\/blog\/omc-sector-is-set-to-post-strong-earnings-growth-what-investors-should-know\/","title":{"rendered":"OMC Sector is set to post strong earnings growth, what investors should know?"},"content":{"rendered":"\n

Oil Marketing Companies (OMCs) like PSO<\/strong> <\/a>and APL<\/strong> <\/a>are expected to post solid results for the April\u2013June 2025 quarter (4QFY25). According to market forecasts, profits for both companies could jump 41% year-on-year (YoY)<\/strong> and 16% quarter-on-quarter (QoQ)<\/strong>, making it the strongest quarter since FY22.<\/p>\n\n\n\n

Let\u2019s break it down <\/p>\n\n\n\n

Why earnings are expected to jump?<\/h2>\n\n\n\n

The profit growth is likely due to:<\/p>\n\n\n\n

    \n
  • Higher fuel sales volumes<\/strong> during the quarter<\/li>\n\n\n\n
  • Lower finance costs<\/strong>, thanks to reduced borrowing and interest rates<\/li>\n\n\n\n
  • Lower taxes<\/strong> compared to the same period last year<\/li>\n<\/ul>\n\n\n\n

    Combined, these factors are expected to give a strong boost to the bottom line of both companies.<\/p>\n\n\n\n

    Fuel sales hit a high<\/h2>\n\n\n\n

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

      \n
    • PSO<\/strong> saw its volumes rise by 14% YoY<\/strong><\/li>\n\n\n\n
    • APL<\/strong> reported a 17% YoY<\/strong> increase<\/li>\n<\/ul>\n\n\n\n

      However, for the full year, volumes were slightly down due to weaker sales in earlier quarters.<\/p>\n\n\n\n

      PSO\u2019s receivables finally coming down<\/h2>\n\n\n\n

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

        \n
      • PSO\u2019s finance costs are expected to go down 32% YoY<\/strong><\/li>\n\n\n\n
      • Company\u2019s cash flow from operations (CFO) is expected at PKR 74bn<\/strong>, up 5.5x<\/strong> YoY<\/li>\n\n\n\n
      • Working capital ratios are also improving, showing stronger financial health<\/li>\n<\/ul>\n\n\n\n

        Investment view<\/h2>\n\n\n\n

        Analysts are optimistic about both PSO<\/strong> and APL<\/strong> going forward. Why?<\/p>\n\n\n\n

          \n
        1. Fuel margins<\/strong> (regulated by the government) are expected to increase in FY26<\/li>\n\n\n\n
        2. Economic recovery will likely boost fuel demand<\/li>\n\n\n\n
        3. Resolution of circular debt could further improve PSO\u2019s position<\/li>\n<\/ol>\n\n\n\n

          Target Prices (Dec\u201925):<\/strong><\/p>\n\n\n\n

            \n
          • PSO:<\/strong> PKR 729\/share<\/strong> | Forward P\/E: 6.0x<\/strong> | Dividend Yield: 5.2%<\/strong><\/li>\n\n\n\n
          • APL:<\/strong> PKR 825\/share<\/strong> | Forward P\/E: 7.5x<\/strong> | Dividend Yield: 6.2%<\/strong><\/li>\n<\/ul>\n\n\n\n

            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.<\/p>\n\n\n\n

            Source: AKD Securities <\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"

            Oil Marketing Companies (OMCs) like PSO and APL are expected to post solid results for the April\u2013June 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.<\/p>\n","protected":false},"author":9252,"featured_media":9509,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[154,343],"tags":[168,166],"class_list":["post-10009","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-sector-analysis","tag-apl","tag-pso"],"featured_image_src":{"landsacpe":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/06\/Top-X-Stocks17-1140x445.jpg",1140,445,true],"list":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/06\/Top-X-Stocks17-463x348.jpg",463,348,true],"medium":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/06\/Top-X-Stocks17-300x188.jpg",300,188,true],"full":["https:\/\/ksestocks.com\/blog\/wp-content\/uploads\/2025\/06\/Top-X-Stocks17.jpg",1920,1200,false]},"_links":{"self":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/users\/9252"}],"replies":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/comments?post=10009"}],"version-history":[{"count":2,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10009\/revisions"}],"predecessor-version":[{"id":10013,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/posts\/10009\/revisions\/10013"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media\/9509"}],"wp:attachment":[{"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/media?parent=10009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/categories?post=10009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ksestocks.com\/blog\/wp-json\/wp\/v2\/tags?post=10009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}