HASCOL on the growth trajectory

Amid improved earnings by the oil marketing companies, Hascol Petroleum Limited (PSX: HASCOL) still stands out. The relatively young OMC has gained a foothold of the sector in no time. Hascol’s stock has been scooting up, beating its peer OMCs and the benchmark index. The rally in the stock has been phenomenal, and long; the share price has increased by five times since its IPO in 2014.

Hascol Petroleum’s financial performance announced on the bourse over the weekend is just another indication of the firm prepping for the long haul. Hascol’s earnings for CY16 came primarily from core operations; top line growth has been captivating with net revenues increasing by 71 percent year-on-year in CY16. The volumetric growth for the firm has been significant where volumes are expected to have risen by 35 percent year-on-year. Apart from that, retail fuel margins also lifted the top line.

Hascol’s bottom-line for CY16 was up by 86 percent year-on-year, and besides the revenue accretion, the growth in earnings was also brought by inventory gains as seen from improved gross margins.

Hascol’s financial and operational performance has exceeded its peers as it is a relatively a new OMC. The column has at length talked about the firm’s achievement since going public. (Rea: Hascol’s rally still storming, published on April 14, 2017). Last quarter, the OMC announced its BoD’s approval of setting up a lube oil blending and grease plant, for which six acres of land has been acquired at Port Qasim for building the plant in collaboration with FUCHS-Germany. The total cost of the project is set to be around Rs1.8 billion, and the plant will be operational in two years.

Hascol has also planned to enter the LNG, LPG and jet fuel business. It is entering the LPG business and has applied to OGRA for LPG Marketing License. The firm will set up a storage facility at Port Qasim to import LPG and sell bulk LPG to third parties. Hascol and Vitol have also started joint venture company for marketing of LNG in the country where Vitol will be a 70 percent shareholder and Hascol will be a 30 percent shareholder.