Lahore, December 31, 2018 (PPI-OT): The ratings incorporate Gas and Oil Pakistan Limited’s (GO) growing presence in the oil marketing (OMC) segment. The company has attained ~3.4% market share in a competitive market over 4 years of operations and has 379 outlets. The company aims to carry on its expansion strategy to further penetrate the retail segment by targeting semi-urban and rural areas. The ratings drive strength from a well-structured organization and experienced management team. GO capitalizes on strong managerial support from its sponsors who have significant knowledge in oil procurement and distribution.
The company is in the midst of large-scale capex programme to increase its storage capacity to support expansion initiatives. GO aims to finance the capex via debt, sale of an equity stake to a strategic investor and via IPO. During 9MCY18, GO’s leveraging has increased significantly due to higher short-term borrowing. The company maintains strong coverage ratios though they have diluted on YoY basis. The company equity base has been strengthened with induction of VITOL in the shareholding. This also added to synergistic benefits with augmented supply chain.
The positive outlook captures the company’s augmented ability to expand its business in light of the fresh elevated strategy. Rollout of the planned business strategy with sustainable results is considered positive. In the meantime, financial matrix needs to be upheld.
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Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
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Lahore – Pakistan
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