PACRA maintains the Preliminary Ratings to Euro Oil (Pvt.) Limited - PPSTS - PKR 2.0bln - TBI

Euro Oil (Private) Limited (“Euro Oil” or “the Company”) has established a growing presence in Pakistan’s OMC sector, with 173 retail stations, including 19 company-operated sites, supported by 12,800 MT storage capacity at Sahiwal. The ratings are supported by the sectoral expertise of its key sponsors and the strategic 20% equity stake held by BB Energy, a global energy trading and integrated energy-commodities player. The Company also benefits from its agreement with PETRONAS to market and distribute lubricants across Pakistan. Its product portfolio is primarily concentrated in HSD and PMG. During FY26, the Company’s sales volume declined to 236.3mln liters from 256.2mln liters in FY25, reflecting lower overall volumes primarily due to elevated petroleum prices. Despite lower volumes, revenue increased to PKR 66,391mln from PKR 61,487mln. To capitalize on a 1.2% market share and a notable 8% revenue surge, Euro Oil is pursuing infrastructure expansion at Sahiwal, Daulatpur ,and Kohat, supporting its planned geographical expansion. Working capital remained stable, while FCFO increased to PKR 1,852mln and interest coverage improved to 5.9x from 3.2x in FY25. The company’s leverage decreased to 46.6% in FY26 as compared to 55.2% in the prior year. FCFO stood at PKR 1,852mln, while interest coverage improved to 5.9x from 3.2x in FY25. Shareholders’ equity increased to PKR 3,488mln, against total debt of PKR 2,603mln.
The Company intends to issue a short-term Sukuk of up to PKR 2,000mln, including a PKR 500mln green shoe option, to meet working capital requirements. The instrument carries a tenor of up to six months and will be secured through a ranking charge over current assets with a 25% margin. Credit enhancement includes designated collection accounts under lien, minimum cash throughput of 4 times the issue size, and a Debt Payment Account (DPA) to be fully funded seven working days prior to maturity. A cash entrapment mechanism further reduces the take-out risk. Irrevocable instructions to this effect will be issued by the company to Askari Bank, and the bank will acknowledge. Implementation of the same will be overseen by the investment agent. Compliance with the agreed security and cash-flow mechanisms remains important.

About the Entity
Euro Oil was incorporated in 2016 and obtained its OMC license from OGRA in 2018. The Company is primarily owned by Mr. Umer Mujib Shami and associates (38.5%), Mr. Adnan Nasir and associates (38.5%), and BBE D PTE. LTD. (20.0%), a Singapore-domiciled subsidiary of BB Energy. The Board comprises seven members, including four Executive and three Non-Executive Directors. Mr. Adnan Nasir serves as Chairman, while Mr. Umer Mujib Shami leads the company as the CEO.

About the Instrument
Euro Oil (Pvt.) Limited is set to issue a short-term, rated, secured, and privately placed Sukuk of up to PKR 2,000 million, which includes a PKR 500 million green shoe option. The instrument carries a six-month tenor with an indicative profit rate of 6-Month KIBOR plus 150 bps, aimed at fulfilling the company’s short-term working capital requirements. The instrument features a bullet repayment of the total principal amount plus profit on maturity. The instrument is backed by a structured Debt Payment Account (DPA) build-up, requiring 100% in the final 07 days of maturity, alongside a mandatory 4x cash flow throughput requirement routed through designated collection accounts held under lien.