Press Release
VIS Maintains Entity Ratings of Oil Industries Pakistan Limited
Karachi, January 22, 2026: VIS Credit Rating Company Limited (‘VIS’) has maintained the entity ratings of Oil Industries Pakistan Limited (‘OIPL’ or ‘the Company’) at ‘A-/A2’ (A Minus/ A Two). The medium to long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A2’ denotes good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings has been changed to ‘Positive’ from ‘Stable’. The previous rating action was announced on November 21, 2024.
Oil Industries Pakistan Limited (“OIPL” or "the Company"), founded on November 20, 1976, under the "TARGET" brand, transitioned to a Public Limited (Unlisted) entity on October 28, 2021. The Company is engaged in the manufacturing, blending, and sale of lubricating oils, as well as the procurement and distribution of petroleum products. OIPL's registered office, located in Karachi, functions as its administrative headquarters. The manufacturing facility, situated in the Korangi Industrial Area, Karachi, supports production and blending operations. Additionally, a petroleum storage facility in District Sahiwal, Punjab, with a 5,000-metric-ton capacity, enables the storage and regional distribution of petroleum products. The Company also operates branch offices in Lahore and Multan to support distribution and broaden market access.
The revision in the rating outlook reflects improving fundamentals and forward-looking initiatives. The Company’s planned expansion projects, including the development of a new storage facility and the addition of fuel retail outlets, are expected to enhance distribution capacity and market penetration over the medium term, albeit with associated execution risk. The outlook is further supported by Company’s capitalization plans to enhance financial flexibility. The outlook also incorporates a strengthening financial profile. Margins have benefited from operational efficiencies, disciplined cost management, and lower finance costs, despite declining market share in the fuel segment. The capitalization profile remains conservative and has improved following the settlement of short-term borrowings. Liquidity has strengthened due to improved internal cash generation, supported by inventory rationalization, while debt-servicing capacity has improved, as reflected in stronger coverage metrics.
However, assigned ratings continue to be constrained by elevated business risk profile of the OMC sector, driven by a regulated pricing regime, intense competitive dynamics, exchange rate fluctuations and heightened sensitivity to macroeconomic variables. Notwithstanding these challenges, the Company’s diversified operating profile, with presence across both fuel marketing and lubricants, provides a degree of earnings resilience. In particular, the lubricants segment carries a moderate business risk profile, supported by relatively higher margins, stable demand from automotive and industrial end-users, and the Company’s market position in transformer oil and retail engine oil, backed by over four decades of operating history. Going forward, Company’s ability to enhance market share through volume growth and profitability amid sector volatility, while maintaining sound liquidity and capitalization indicators, will remain important for ratings.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf