PACRA Assigns Preliminary Rating to Gas & Oil Pakistan Limited | GO Long Term Sukuk - I | PKR 5.0bln | TBI

Gas & Oil Pakistan Limited ("GO" or "the Company") benefits from a strategic partnership with Aramco, which holds an equity stake of ~40%, leveraging the global energy giant's resources to reshape Pakistan’s OMC landscape and GO’s market position. The financially sound sponsors contribute deep expertise across the energy supply chain, while governance has been reinforced through the induction of Aramco's representatives onto the Board of Directors and into key management roles. Future growth is expected to be augmented by entry into the lubricants segment via Valvoline. Operationally, GO maintains a substantial footprint, running an extensive retail network of about 1,329 outlets, including 80 COCO sites, many successfully rebranded under the Aramco name. Furthermore, the Company boasts the second-largest storage capacity in the sector at ~205,038 metric tons and supplements its income through hospitality services. Its operations encompass the procurement, storage, distribution, and marketing of petroleum, oil, and lubricants (POL) sourced both locally and internationally. Ranked among the top-tier OMCs by both volumetric sales and retail presence, GO has successfully stabilized its business and financial risk profile. During CY25, the Company has witnessed significant topline growth, clocking at ~PKR 619.6bln (CY24: PKR 327.8bln), reflecting the growth of ~89.0%. with improving profitability, a trajectory expected to persist due to effective marketing initiatives and sustained, stable cash flows. While the trade debts, mainly constituting government entities, corporate customers, and dealers stood at ~PKR 53.4bln (CY24: ~PKR 36.4bln), a growth of ~46.7%, is substantially slower than the annualized revenue growth, reflecting prudent working capital discipline, and is further supported by the implementation of a Board-approved credit policy aimed at maintaining tighter control over receivable cycles going forward. The Company’s working capital requirements are met through conventional means, and now a new stream of commercial borrowing has been added. A substantial supplier credit extended by Aramco provides an additional cushion. The capital structure had already materially strengthened through an equity injection by Aramco via a rights issue.
The Company is now expanding its COCO retail network. The company previously issued a bond of PKR 2.5bln and now another bond of PKR 5bln is planned.
The Sukuk is structured with a dual security framework. Apart from the conventional security arrangement, it includes a credit enhancement feature of Sukuk Payment Account. This will ensure bondholders continue to be serviced in case any unforeseen contingency slows cash generation. Nevertheless, smooth functioning of the company is expected, especially because the company has a strong supply chain and robust oversight mechanism in place. Moreover, once operational, the new sites will boost profitability and generate additional cash flow, providing a near-term financial cushion.
The rating is dependent on continued compliance with the agreed terms and sustainability and growth in business and financial mertics.

About the Entity
GO is engaged in the procurement, storage, distribution, and marketing of POL products and lubricants. Aramco holds ~40% stake in the Company, while ~60% stake resides with GO. Mr. Shahid Mehmood Khan chairs the Board, while Mr. Khalid Riaz heads as CEO.

About the Instrument
Gas and Oil Pakistan Limited (GO) is set to issue a second long-term, Rated, Secured, Privately Placed Sukuk of up to PKR 5.0bln, including a Green Shoe Option of PKR 1.5bln. The tenor is 5 years. It is expected to carry a profit rate of 3MK + 1%. The Sukuk is secured by an exclusive first charge over existing COCO and CODO assets with a 25% margin. Exclusive lien on the Sukuk Payment Account is being provided to further secure investors.