Skip to main content

OGDC: Brief Comments

OGDC carries a high weight in PSX indices and  pays consistent quarterly dividends. That is reflected in its price stability.

Recent profitability was primarily driven by higher international oil prices and a substantial depreciation of the Pakistani Rupee.

The company has substantial other income linked to interest rates. However, as interest rates decline, this income has decreased, negatively impacting earnings. Given OGDC's minimal finance costs, it does not benefit from lower interest rates.

Its core earnings remain closely tied to international oil prices and exchange rates. With oil prices weak and a further downtrend expected, revenue pressure persists. Additionally, a stronger Pakistani Rupee would negatively affect earnings.

Despite frequent announcements of new discoveries, production has remained sluggish, raising concerns about operational efficiency.

Moreover, an overhang on the stock persists due to the potential for a tranche offer for sale at the exchange.



Popular posts from this blog

 A Snapshot of Exchange Traded Funds at PSX

Brent Crude Logs Biggest Weekly Drop Since September on Weak Demand, Easing Tensions

Oil prices were under pressure this week. Brent crude oil futures fell 1.9% to $73 per barrel on Friday, registering the biggest weekly loss since early September, with prices dropping over 7%. The decline was attributed to weaker demand forecasts from OPEC and the International Energy Agency (IEA), slowing economic growth in China, and signs of easing geopolitical tensions in the Middle East. Both OPEC and the IEA revised down their demand forecasts for 2024 and 2025. China's refinery output declined for the sixth consecutive month, impacted by weak fuel demand and the growing adoption of electric vehicles (EVs). Meanwhile, U.S. crude oil production reached a new record last week. Although a drawdown in U.S. crude inventories and stronger-than-expected retail sales in September provided some support to oil prices, easing concerns about a broader conflict in the Middle East exerted additional downward pressure on the market.

PSX Strongly Rebounds

The Pakistan Stock Exchange (PSX) reacted positively to the conclusion of the IMF staff-level agreement and has now recovered a substantial part of the losses sustained on Monday. Today, out of the 1,139-point gain in the KSE-100 Index, around 800 points were contributed by UBL, OGDC, PPL, and Meezan Bank.