External broker reports(aggregated public sources), Topline Securities

Topline Securities

External broker reports(aggregated public sources)

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Equity Bottom-Up

<ul><li>We expect aggregate earnings of the covered refineries to increase 11.1x YoY and 6.0x QoQ to Rs38.9bn.</li><li>The YoY increase is mainly driven by higher Gross Refinery Margins (GRMs), coupled with higher upliftment.</li><li>Industry GRMs are expected to clock in at US$27.6/bbl in 1QFY27, compared with US$6.5/bbl in 1QFY26 and US$29.0/bbl in 4QFY26.</li></ul>

We expect aggregate earnings of the covered refineries to increase 11.1x YoY and 6.0x QoQ to Rs38.9bn.The YoY increase is mainly driven by higher Gross Refinery Margins (GRMs), coupled with higher upliftment.Industry GRMs are expected to clock in at US$27.6/bbl in 1QFY27, compared with US$6.5/bbl in 1QFY26 and US$29.0/bbl in 4QFY26.

Pakistan Refinery - Refinery Profitability Likely to Remain Robust in 1QFY27; Stronger GRMs and Higher Upliftment Lifted Profitability

<ul><li>Pakistan’s listed refinery sector has been amongst the best-performing sectors on the PSX in FY27TD with a return of 56% compared to benchmark index (KSE-100) return of -1.6%.</li><li>With the approval of amended refining policy now, we believe the signing by refineries is expected to follow in the next few days, as per news.</li><li>Post upgradation of plants, the profitability of the refineries could significantly escalate amidst improved GRMs due to change in product mix, continuation of deemed duties income till 7th year of signing, removal of penalties amidst product specification compliance, and increase in production.</li></ul>

Pakistan’s listed refinery sector has been amongst the best-performing sectors on the PSX in FY27TD with a return of 56% compared to benchmark index (KSE-100) return of -1.6%.With the approval of amended refining policy now, we believe the signing by refineries is expected to follow in the next few days, as per news.Post upgradation of plants, the profitability of the refineries could significantly escalate amidst improved GRMs due to change in product mix, continuation of deemed duties income till 7th year of signing, removal of penalties amidst product specification compliance, and increase in production.

Pakistan Refinery - Upgrade to Boost Profits, Financial Close Remains Key Catalyst; Quantifying the Earnings Uplift for PRL & ATRL

Thematic (Sector/Industry)

<ul><li>Pakistan’s Gross Refining Margins (GRMs) averaged US$18.3/bbl in Sep-26, against US$6.2/bbl in Sep-25 and US$30.1/bbl in Aug-26.</li><li>The sharp YoY improvement in GRMs was driven by stronger petroleum product prices amid the US-Iran conflict.</li><li>On a sequential basis, margins were primarily impacted by the faster increase in crude prices relative to product prices, along with the cap on HSD cracks at US$41.89/bbl, effective Aug 20, 2026.</li></ul>

Pakistan’s Gross Refining Margins (GRMs) averaged US$18.3/bbl in Sep-26, against US$6.2/bbl in Sep-25 and US$30.1/bbl in Aug-26.The sharp YoY improvement in GRMs was driven by stronger petroleum product prices amid the US-Iran conflict.On a sequential basis, margins were primarily impacted by the faster increase in crude prices relative to product prices, along with the cap on HSD cracks at US$41.89/bbl, effective Aug 20, 2026.

Pakistan Refinery Monitor: Expected GRMs for Sep-26 Closed at US$18.3/bbl

<ul><li>As per news reports, the Cabinet Committee on Energy (CCoE) has approved amendments to the Pakistan Oil Refining Policy 2023, removing the remaining impediments that had delayed execution of refinery upgrade agreements since the initial policy's notification in August 2023.</li><li>The policy had effectively remained in limbo after the Finance Act 2024 shifted major petroleum products from the zero-rated to the exempt sales tax regime, significantly weakening project economics by preventing refineries from claiming input sales tax on capital expenditure.</li><li>We view this development as positive for listed refineries, particularly PRL, NRL and ATRL, as it materially improves the visibility of long-delayed upgrade projects aimed at increasing Euro-V compliant fuel production and enhancing product yields.</li></ul>

As per news reports, the Cabinet Committee on Energy (CCoE) has approved amendments to the Pakistan Oil Refining Policy 2023, removing the remaining impediments that had delayed execution of refinery upgrade agreements since the initial policy's notification in August 2023.The policy had effectively remained in limbo after the Finance Act 2024 shifted major petroleum products from the zero-rated to the exempt sales tax regime, significantly weakening project economics by preventing refineries from claiming input sales tax on capital expenditure.We view this development as positive for listed refineries, particularly PRL, NRL and ATRL, as it materially improves the visibility of long-delayed upgrade projects aimed at increasing Euro-V compliant fuel production and enhancing product yields.

Topline Flash Note: Pakistan Refinery: Government Approves Proposed Amendments to Pakistan Oil Refining Policy, 2023

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Pakistan Refinery (PRL PA)

Pakistan Refinery - Refinery Profitability Likely to Remain Robust in 1QFY27; Stronger GRMs and Higher Upliftment Lifted Profitability

We expect aggregate earnings of the covered refineries to increase 11.1x YoY and 6.0x QoQ to Rs38.9bn. The YoY increase is mainly driven by higher...

Topline Securities

Pakistan Refinery - Upgrade to Boost Profits, Financial Close Remains Key Catalyst; Quantifying the Earnings Uplift for PRL & ATRL

Pakistan’s listed refinery sector has been amongst the best-performing sectors on the PSX in FY27TD with a return of 56% compared to benchmark...

Topline Securities

Pakistan Refinery Monitor: Expected GRMs for Sep-26 Closed at US$18.3/bbl

Pakistan’s Gross Refining Margins (GRMs) averaged US$18.3/bbl in Sep-26, against US$6.2/bbl in Sep-25 and US$30.1/bbl in Aug-26. The sharp YoY...

Topline Securities

Topline Flash Note: Pakistan Refinery: Government Approves Proposed Amendments to Pakistan Oil Refining Policy, 2023

As per news reports, the Cabinet Committee on Energy (CCoE) has approved amendments to the Pakistan Oil Refining Policy 2023, removing the...

Topline Securities

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