PACRA Maintains Entity Ratings of Sitara Petroleum Service (Private) Limited

Lahore, November 15, 2019 (PPI-OT): The ratings reflect the vigorous business profile of Sitara Petroleum Service (Private) Limited. Sponsors have been engaged in the business for over three decades and reflecting their industrial experience. Sitara Operates a network of ~30 retail stations which is mainly spread out in the Southern Punjab region while also provides PoL products directly to customers in bulk. The company provides fleet logistic accommodations (carriage income) to OMCs (mainly to Gas and Oil Pakistan Ltd ). The sponsor’s long sodality with these business lines is being considered positive. The company’s prime profits are being engendered by the fleet logistics business. It carries ~70% share in the gross profit, followed by retail (~21%) and bulk business segments (~9%). Over the years portion of the profit from the fleet logistics division is soaring while retail and bulk segments are additionally supplementing the profitability.

The company’s decision to build oil reserves reflects its risk appetite which must be considered, though the latest results have been positive. The financial risk profile is characterized by an adequate leveraged capital structure. This along with amended cashflows avail manage the financial peril. Adequate coverages lend support to financial profile. The equity has been boosted through profit. The sponsors plan to establish an OMC has been put on hold considering the economic situation. The overall governance framework has augmented by enhancing financial quality.

The ratings are dependent on the management’s facility to sustain its business volumes while holding the margins. Sustaining the business and financial profile along with improvement in the governance framework would be vital for the ratings. Meanwhile, financial transparency is considered paramount.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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