PACRA Maintains Entity Ratings of Flow Petroleum (Pvt.) Limited

Flow Petroleum (Pvt.) Limited ('Flow Petroleum' or 'the Company') continues to strengthen its foothold as an emerging player in the oil marketing companies (OMC) sector. The ratings reflect a sustained improvement in the Company's business and financial profile, underpinned by strong topline momentum, improved profitability, and disciplined working capital management. The Company maintains a network of ~125 retail outlets supported by strategically located storage facilities at Fakirabad (5,623MT), Daulatpur, and Kohat, with a cumulative incremental capacity of ~12,229MT. The planned merger with Quality 1 Petroleum, which would integrate ~450 stations (~250 operational) and add ~11,095MT of storage, remains a key strategic catalyst, and its timely execution remains essential to ratings stability. The Company's affiliation with Aslam Energy (Pvt.) Limited, with its established logistics presence, continues to supplement operational efficiency. During 1HFY26, the Company recorded net revenues of PKR ~44.2bln, reflecting a robust annualized growth of ~111.7% over the prior year's base, driven by volumetric expansion and favourable price dynamics. Gross profit margin improved to 3.6% in 1HFY26 from 2.0% in FY25, while the operating profit margin strengthened to 2.9% from 0.4%, signaling recovery in core business economics. Net income for 1HFY26 stood at PKR ~938mln, a material improvement over PKR ~159mln in FY25. On the financial risk front, the Company maintains adequate coverage metrics and a stable working capital cycle. The capital structure remains modest, keeping leverage at an adequate level. During FY25, the Company acquired a controlling interest in Flow Karachi Terminal Limited (formerly TransAsia Refinery Limited), aimed at enhancing vertical integration, strengthening supply security, and improving pricing efficiency across the value chain. This transaction has been undertaken in collaboration with its related party, Aslam Energy (Pvt.) Limited, resulting in notable intercompany exposures. Accordingly, the materiality of related party balances—particularly payables to Aslam Energy—and the clarity around structured repayment arrangements remain key consideration. Timely settlement of these obligations, alongside transparent governance of related party transactions, will be critical in sustaining the Company’s financial risk profile.
The ratings are dependent on Flow Petroleum’s ability to improve market penetration along with business margins. Successful and timely materialization of the Company's strategic initiatives (retail expansion, making FKTL operational, and incorporating lubricants into the revenue stream) remains imperative to the ratings. Streamlining the governance framework remains crucial.

About the Entity
Flow Petroleum (Pvt.) Limited ('Flow Petroleum' or 'the Company') was incorporated as a private limited company in 2017 under the repealed Companies Act, 2017. The Company is engaged in the procurement, storage, distribution, marketing, and import of petroleum products and lubricants. With a network of ~125 retail outlets, the Company holds ~1% of the market share in total sales and has a storage capacity of around 5,350 MT. The Company's ownership vests with Mr. M. Waris (~51%) and Mr. M. Asif (~49%). Mr. Haroon Rasheed, a Non-Executive Director, has been recently appointed as the Chairman of the Company. Mr. M. Waris heads the Company as the CEO