Karachi: VIS Credit Rating Company Limited has reaffirmed its entity ratings for Oil Industries Pakistan Limited (OIPL) at ‘A-/A2’, maintaining a ‘Stable’ outlook. The affirmation reflects OIPL’s good credit quality and adequate protection factors for medium to long-term obligations, while short-term ratings indicate a strong likelihood of timely repayment.

According to VIS Credit Rating Company Limited, the ratings consider OIPL’s business risk profile within the lubricant and oil marketing sectors. The company, established in 1976 under the “TARGET” brand, operates as a Public Limited (Unlisted) entity since 2021. It engages in manufacturing and distributing lubricating oils and petroleum products, with its headquarters and production facility located in Karachi. Additionally, OIPL runs a petroleum storage facility in Sahiwal and plans to expand storage capacity in Sindh.

The company’s financial risk profile, bolstered by revenue growth in the oil marketing segment, is also a factor in the ratings. Despite a decline in gross margins due to lower profitability in oil marketing, the lubricant segment continues to sustain overall profitability. Improvements in capitalization metrics and stable liquidity support the company’s financial standing. However, the oil marketing segment faces challenges from regulatory and market pressures, while the lubricant segment benefits from stable demand despite competitive and currency volatility.

Looking ahead, OIPL’s risk profile will be shaped by the expansion of its oil marketing business and its impact on margins. The lubricant business is expected to continue providing stability. Maintaining capitalization, liquidity, and coverage ratios will be crucial for future ratings, with a potential listing of the company seen as a positive development.

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