Pakistan State Oil’s (PSX: PSO) earnings have been robust in 9MFY17. The OMC announced its financial performance for the first nine months of FY17 yesterday along with a cash dividend of Rs10 per share as the company had skipped biannual payout on account of liquidity constraints in the previous quarter.

PSO’s top line was up by 29 percent year-on-year in 9MFY17, and the key boost to the revenues came in the last two quarters (2Q and 3Q). The revenues for 3QFY17 were up by 62 percent year-on-year. This increase in revenues came primarily from increase in HSD and motor gasoline volumetric sales. However, the drop in furnace oil volumes held back the top line growth to some extent.

Besides higher sales revenues, PSO’s earnings climbed on account of higher other income (penal interest income), inventory gains and slightly lower finance cost. However, finance cost was up in 3QFY17 and this is due to rising receivables.

Moving on, the company’s reliance on short term borrowings is likely go up in order to maintain working capital requirements with growing circular debt position, which will increase finance costs. PSOs management foresees lubricant sales to jump up by 20 percent year-on-year in FY17 to 35000 tons according to IGI Securities research brief. Also the company further expects to increase its retail outlets amid rising volumetric sales.