PACRA Maintains Entity Ratings of Sitara Petroleum Service (Private) Limited

Business News English

Lahore, May 19, 2021 (PPI-OT): The ratings reflect the vigorous business profile of Sitara Petroleum Service (Pvt.) Limited. Sponsors have been engaged in the business for over three decades, reflecting their business acumen. Sitara operates a network of ~40 retail stations which are mainly spread out in the Central and Southern Punjab region while providing POL products directly to customers in bulk. The company is engaged in fleet logistic accommodations (Carriage Income) to OMCs (mainly to Gas and Oil Pakistan Ltd). The sponsor’s long association with these business lines is being considered positive.

The company’s prime profits are being engendered by the fleet logistics business. It carries ~68% share in the gross profit, followed by retail (~22%) and bulk business segments (~10%). The income from the fleet logistics division has soared over the years as the fleet size expands whereas retail and bulk segments supplement the profitability. The financial risk profile is characterized by an adequate leveraged capital structure. The equity has been boosted through profits. The company has sizable land holdings, which supplement risk absorption capacity. The sponsors are engaged in real estate projects; these have been partly financed through group companies including Sitara Petroleum. The related and ensuing risk must be adequately managed.

The ratings are dependent on the management’s facility to sustain its business volumes while holding the margins. Sustaining the business and financial profile along with improvement in the governance framework would be vital for the ratings. Meanwhile, financial transparency is considered paramount.

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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