Analyst
Faiqa Qamar
faiqa.qamar@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA maintains Entity Ratings of Puma Energy Pakistan (Pvt.) Limited
Rating Type | Entity | |
Current (28-Aug-24 ) |
Previous (28-Aug-23 ) |
|
Action | Maintain | Maintain |
Long Term | A- | A- |
Short Term | A2 | A2 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Pakistan relies significantly on imports to meet its energy demand. During FY23, the consumption of POL products, furnace oil (FO), high-speed diesel (HSD), motor spirit (MS), and high-octane blended component (HOBC) - which make up ~95% of the total sales of the country - declined by ~25.5% reported at ~17.1mln MT (FY22: ~23.1mln MT). A decrease in total consumption was due to unstable economic conditions and government policy changes. The transportation and power sectors remain the main consumers, accounting for ~80% of total demand. Despite challenges, the sector's overall outlook - cashflows and liquidity - remains stable
The assigned ratings incorporate Puma Energy Pakistan (Pvt.) Limited’s ('Puma' or 'the Company') established retail network and its strong presence on the operational front. Currently, Puma operates through 600+ retail pumps spread across the country with a concentration in Punjab (~371 pumps) and Sindh (~98 pumps). However, volumetric supply required to utilize all the retail stations remain a challenge mainly due to smuggled product availability in the market. The rating factors in the sponsor's substantial business acumen in the OMC sector and their commitment to provide financial support, if needed. Moreover, consistent rebranding activities under the name of Puma benefit the Company's overall performance. This along with entering into a Trademark License Agreement (TMLA) with Puma Energy International S.A adds strength. Puma mainly generates revenue from HSD (~43%), and PMG (~39%) whereas lubricants and others generate ~18%, capturing ~1.3% market share as of Dec-23. Topline posts a growing trajectory over the years. However, due to high input costs, business margins and in turn profitability remains limited. Lately, margins have started to normalize and are expected to improve profitability. Dependency on suppliers' credit factors in high exchange loss risk, which is mitigated due to only 21% imported products and a stable Rupee. Financial risk remains adequate, supported by a strong working capital cycle and adequate coverages.
The rating captures the Company’s ability to sustain business operations through planned re-branding of retail sites and conversion of subordinated loan into paid up capital. Sustaining key financial metrics, working capital ratios and coverages are crucial for ratings.
About
the Entity
Puma Energy Pakistan (Pvt.) Limited was incorporated in 2001 and registered as an oil marketing company (OMC) formerly known as Admore Gas (Pvt.) Ltd. under the Companies Ordinance, 1984 (now the Companies Act, 2017). In 2017, the Company was renamed as Puma Energy Pakistan (Pvt.) Ltd.
Mr. Amir Waliuddin Chishti holds ~99.9% shares and chairs the BoD. While, Mr. Fayaz Ahmad Khan, the CEO, has headed the Company since Sep-22. He is aided by a team of experienced professionals.