PACRA maintains entity ratings of Gas & Oil Pakistan

June 02, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of Gas & Oil Pakistan Limited at "A+" for the long term and "Al" for short term with a stable outlook forecast, latest press release issued by PACRA showed.

The ratings incorporate Gas & Oil Pakistan Limited (GO), a strong presence in the oil marketing segment.

The Company has augmented its market share in a competitive market, benefiting from the strategic positioning of the stations that it feeds.

GO aims to carry out its expansion strategy by further penetrating the retail segment of semi-urban and rural areas.

The Company has a storage capacity of ~ 205,200 metric tonnes and intends to enhance it further.

This complements GO’s plans to keep the pace of growth with the augmented storage capacity.

GO further aims to inaugurate more company-owned and operated sites (COCOs).

In order to ensure a consistent and reliable supply of high-quality fuels and to address the increased working capital requirements, the sponsors are planning to collaborate with a strategic partner.

Despite an 11.6% decrease in the volumes, the Company experienced a substantial growth of 55.2% YoY in its topline during 2022, primarily attributable to rupee dollar parity.

There was a decline in profitability, which was primarily due to high foreign exchange losses coupled with finance cost, offsetting the gains from increased topline and gross profit margin.

The management intends to keep the leverage indicators aligned with its risk profile. Moving forward, GO aims to diversify its revenue streams, strengthening its business risk profile.

Given the nature of the business and muted growth in economy, any adverse change in consumption patterns, resulting in a decrease in sales volume, would be a key rating sensitivity.

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