OGDC & PPL Cash Collection Ratios Surpass 100% in 1QFY25

Staff Report:
OGDC reported its first decline in receivables after 15 quarters. The company’s cash collection ratio improved to 126% in 1QFY25, up from 93% in 4QFY24. The recovery ratio reached 121% due to gas price revisions implemented in January, November 2023, and February 2024. In absolute terms, OGDC’s trade receivables decreased by Rs27 billion, from Rs635 billion in June 2024 to Rs608 billion in September 2024.

OGDCL Commences Oil and Gas Production from Baloch-2 Well in Sanghar, Sindh

Cash and cash equivalents rose to Rs265 billion (35% of market cap) in September 2024, compared to Rs259 billion in June 2024. Consequently, OGDC announced a dividend of Rs3 per share, with a payout ratio of 31%, the highest 1Q payout ratio in three years. We maintain a BUY recommendation on OGDC, with a December 2025 target price of Rs210 per share, indicating a 21% upside. The stock is currently trading at an FY25E PE of 4.1x and a dividend yield of 9%.

PPL experienced its second consecutive decline in receivables, with a cash collection ratio improving to 106% in 1QFY25, up from 64% in the same period last year. Trade receivables decreased by Rs4 billion, from Rs578 billion in June 2024 to Rs574 billion in September 2024.

PPL’s cash and cash equivalents increased to Rs145 billion (37% of market cap) in September 2024, compared to Rs112 billion in June 2024. As a result, PPL announced a dividend of Rs2 per share for 1QFY25, marking the first quarterly dividend in 16 years since the last payment in September 2008. We have a BUY recommendation on PPL, with a December 2025 target price of Rs180 per share, suggesting a 26% upside. The stock is currently trading at an FY25E PE of 3.8x and a dividend yield of 10%.