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Lahore, June 17, 2023 (PPI-OT): The ratings incorporate Flow Petroleum (Pvt) Ltd’s (Flow Petroleum or the Company) presence in the oil marketing (OMC) segment. The Company is consistently progressing its medium-term objectives to capture market share in already stable and competitive market. Flow Petroleum aims to carry out its expansion strategy by further expanding its retail network to all across Pakistan. The Company has storage facility at Fakirabad with a capacity of 5,350 M.Ton and is building two new storages at Daulatpur and Kohat. The Company has a network of 72 operational retail outlets. This complements its strategy to capture the of growth as targeted.
The equity base of the company has taken support from internal capital generation and adequate sponsor’s financial profile. During FY22, the Company witnessed magnanimous increase of ~262% in total revenue from the corresponding period last year and reached to PKR~15,882mln (FY21 PKR~4,386mln). The streak continued during 6MFY23, to register an increase of 72% and perched at PKR 27,248mln. This was due to increased sales quantum and record high prices of POL products. The Company has exhibited improvement in margins on the back of high petroleum prices, lower operational costs and reduced financial costs.
The ratings reflect an improved business profile of the Company in line with current dynamics of petroleum industry. Despite increasing international POL prices, being an OMC, the Company is able to pass on the hike to consumer with commissioning of new outlets, leading to better revenues. Working capital cycle is stretched and leveraged ratio increased moderately. However, non-interest-bearing loan from related parties is convertible to equity. The Company has total debt of PKR~5,639mln and an equity of PKR ~2,288mln as at end-Dec22.
The ratings are dependent on Flow Petroleum’s ability to build market penetration, improved operational and net profit margins and Improvements in Corporate Governance Structure. Increasing number of retail outlets and storage capacity enhances confidence in Company’s ability to sustain revenue growth and profit margins.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
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