Financials

Analysis

In FY26, the Company reported a profit after tax of Rs. 15 bn, primarily driven by the following contributing factors:

• Gross sales stood at Rs. 3.2 trillion, compared to Rs. 3.4 trillion in FY25, mainly due to regional disruptions. Despite the challenging environment, the Company maintained a robust market position and continued to support demand across its key business segments.

• Gross profit increased to Rs. 99.9 bn from Rs. 96.7 bn in FY25, supported by stable white oil margins and effective cost management. The improvement reflects the Company’s continued focus on cost discipline and operational efficiency.

• Other income amounted to Rs. 17.4 bn, reflecting lower interest and dividend income.

• Operating profit stood at Rs. 79.8 bn in FY26, declining by 8% compared to FY25, primarily due to inflationary pressures on administrative and marketing expenses, coupled with lower other income.

• Finance costs decreased substantially by 24% to Rs. 25.6 bn, compared to Rs. 33.7 bn in FY25, due to lower interest rates and reduced average borrowings, contributing positively to overall profitability.

• Gross Sales

  Gross sales was highest in fourth quarter, driven by favorable price movement.

• Gross Profit

  Gross profit was highest in the third quarter, reflecting higher volumes and improved profitability.

• Other income

  Other income was higher in fourth quarter mainly due to higher financial income pertaining to line fill cost.

• Finance Cost

  Finance cost was highest in the fourth quarter, primarily due to higher interest rates during the quarter and a higher average cost of borrowings.

• Profit After Tax

  Profit after tax was highest in third quarter, primarily driven by higher gross profit.

• Analysis

  The cash flow statement for the past six years highlights the following fluctuations in the Company’s cash flows:

• Operating Activities

  Operating cash flows were negative in FY 2026, primarily due to higher inventory levels and lower payables, resulting in increased working capital requirements. The movement reflects higher cash absorption within the operating cycle during the year.

• Investing Activities

  Negative cash flows from investing activities reflect the Company’s continued investments in assets and strategic diversification initiatives, underscoring its commitment to expanding the operational base and strengthening long-term growth prospects

• Financing Activities

  Negative financing cash flows primarily reflect dividend payments and lease payments during the year, representing the Company’s ongoing distributions to shareholders and settlement of lease-related financial obligations.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• Interest cover improved in FY26, supported by a notable reduction in finance costs.

• Net assets per share increased during the year, supported by growth in shareholders’ equity and retained earnings, reinforcing the Company’s financial strength and long-term value creation.

• The financial leverage ratio increased during the year, primarily due to higher short-term borrowings to support increased working capital requirements.

• The weighted average cost of debt declined in FY26, primarily due to lower interest rates, supported by improved borrowing conditions and more cost-efficient financing.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• The cash to current liabilities ratio declined in FY26 due to lower cash balances following payments towards trade payables. Operating cash flows also declined, mainly due to higher working capital requirements.

• In line with lower operating cash flows, the cash flow from operations to sales and cash flow to capital expenditure ratios declined during FY26.

• The cash flow coverage ratio declined significantly, primarily due to lower operating cash flows. The current ratio improved marginally, while the quick ratio remained stable, indicating a maintained liquidity position.

• Free Cash Flow to Firm declined during FY26, primarily reflecting higher investment and working capital requirements, while continuing to support the Company’s ongoing operational and strategic needs.

• Free Cash Flow to Equity declined during FY26, primarily due to higher working capital and investment requirements, along with an increase in debt, while continuing to support the Company’s financial and strategic objectives.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• Earnings Per Share (EPS) & Market Value per Share

  Earnings per share declined to Rs. 32.1 in FY26 from Rs. 44.54 in FY25, reflecting lower profitability during the year. Market price per share at year end stood at Rs. 342.35, amid continued market volatility and prevailing global geopolitical uncertainties.

• Price-to-Earnings (P/E) & Price-to-Book Ratios

  The P/E ratio improved to 10.67 in FY26 from 8.48 in FY25, reflecting improved market valuation relative to earnings. The stock’s Price-to-Book ratio of 0.62 reflects a market valuation considerably lower than its net asset value, implying undervaluation.

• Dividend Analysis

  PSO declared a dividend of Rs. 10/- per share in FY26, supported by a healthy dividend cover ratio of 3.21, reflecting sustainable shareholder returns.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• The inventory turnover ratio remained strong at 11.52 in FY26, reflecting efficient inventory management and effective working capital utilisation.

• The debtor turnover ratio stood at 7.62 in FY26, reflecting efficient receivables management and robust collection processes, with the ratio consistently maintained above 7 in recent years.

• The creditor turnover ratio stood at 8.59 in FY26, reflecting effective payables management and disciplined management of payment cycles while maintaining supplier relationships.

• The operating cycle stood at 37 days in FY26, slightly lower than prior years, reflecting continued focus on managing inventory and receivables cycles.

• Total asset turnover stood at 3.23 in FY26, reflecting lower sales amid geopolitical and supply-chain uncertainties, while maintaining effective utilisation of the asset base.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• Production per employee improved during FY26, reflecting enhanced productivity, strengthened operational capabilities and continued focus on operational resilience, supported by optimised workforce deployment.

• Revenue per employee declined during FY26, primarily reflecting lower revenue during the year, with workforce levels maintained to support operational requirements and future growth.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• Plant Availability Ratio remained above 1 in FY26, reflecting continued operational reliability and optimised scheduling.

• Customer Satisfaction Index is monitored based on Customer Responses.

Analysis

As of June 30, 2026, variation as compared to June 30, 2025 is as follows:

• Spare inventory as a percentage of asset cost increased during FY26, reflecting enhanced inventory availability to support operational continuity and reliability.

• Maintenance cost as a percentage of operating expenses decreased during FY26, reflecting enhanced cost management and improved operational efficiency.