Karachi, March 30, 2023 (PPI-OT): PIOC: Debt the dampener on upside potential
PIOC market share is expected to dilute to 6.7% during FY23, compared to 7.1% in FY22 due to ~17% capacity expansion of industry during FY23.
The company’s current power mix constitutes 25%/44% of WHR/CFP, with the balance being fulfilled by grid. On the fuel mix front, the company uses a coal mix consisting 50%/30%/20% of Afghan/Local/Imported coal, respectively.
We expect earnings to post at PkR16.0/23.4/sh in FY23/FY24, with expected margins to clock in at 26.4%/29.3% in FY23/FY24.
Company is relatively more leveraged with D/E of 0.63 compared to AKD universe avg. D/E of 0.54. Additionally, all of the company’s loans are tied to KIBOR, which leaves it exposed to the presently high interest rate environment.
We have a “Buy” rating on the stock, with Dec’23 TP of PkR90.2/sh, offering a potential upside of 32% from the last close.