PSX closes the week almost flat
Pakistan Stock Exchange (PSX) remained volatile during the week ended on September 25, 2026. The benchmark Index gained 372 points or 0.22%WoW to close the week at 170,885 points.
Yemeni Houthi attacks on Saudi Arabia’s East-West Pipeline forced the closure of a key export route, pushing Brent crude to a 4-month high of US$109.7/bbl. However, oil prices eased during the final two days.
The index recovered on fading concerns over immediate Saudi supply disruptions, outweighing fears of a broader Middle East conflict.
The State Bank of Pakistan (SBP) kept the policy rate unchanged at 11.50% on Monday, in line with broad market consensus.
The current account deficit narrowed sharply by 70%YoY to US$98 million in August 2926.
Foreign exchange reserves held by SBP hit a record high of US$21.4 billion, pushing the country’s import cover past three months for the first time in 5-Years.
Furthermore, yields on 3 and 6-month T-Bills declined in the last auction.
FDI increased by 80%YoY to US$316 billion during August 2026.
Auto industry sales increased by 11%YoY to 17,485 units in August 2026.
IT exports rose 17%YoY to US$394 million.
Other major news flow during the week included: 1) GoP presents IMF plan to retire PkR3.6tn gas-sector circular debt, 2) Pakistan eyes to seek an expansion of its 30-billion-yuan swap line with China, 3) Pakistan cotton arrivals rises by 19%YoY to 2.4 million bales as of September 3026, 4) Auto financing in August 2026 reached record high of PKR393 billion, and 5) GoP approves PKR75 billion subsidy for fuel relief scheme.
Leading sectors were: Synthetic and Rayon, Leasing Companies, and Real Estate Investment Trust, while laggards included: Textile Weaving, Paper and Board, and Leathers and Tanneries.
Major buyers were Individuals (US$11.0 million) and Banks (US$2.6 million). On the contrary, major selling was recorded by Mutual Funds (US$12.7 million) and Foreigners (US$3.4 million).
Top performing scrips were: PSEL, IBFL, and CPHL. On the other side, laggards included: GHNI, GAL, and NBP.
Pakistan’s leading brokerage house, AKD Securities expects the market to improve on the back of strengthening economic indicators, with the upcoming IMF review in the next week to remain a key near-term catalyst. A potential US-Iran deal could moderate international oil prices from current elevated levels.
The market continues to trade at attractive valuations. The brokerage house forecasts the benchmark Index to reach 263,800 by end December 2026.
Our top picks of the brokerage include OGDC, PPL, UBL, MEBL, HBL, FFC, ENGROH, PSO, LUCK, FCCL, INDU, ILP and SYS.
Pakistan State Oil (PSO) posted 4QFY26 loss after tax of PKR23.1 billion (LPS: PKR49.10), as compared to a profit after tax of PKR5.6 billion (EPS: PKR12.02) for the same period last year. The result came in significantly lower than expectations on account of greater-than-expected inventory losses.
This takes FY26 net profit to PKR15.1 billion (EPS: PKR32.10), down 28%YoY. The result was accompanied with a dividend per share of PKR10, in line with estimates.
Key result highlights for 4QFY26:
Net Revenue for the quarter was recorded at PKR808.97 billion, flat YoY but up 9%QoQ, in line with the estimates. This was essentially driven by higher average fuel prices during the quarter.
PSO reported gross margins of negative 4.2%, down from 2.9% during the same period last year, driven by a decline in oil prices relative to the previous quarter’s closing inventory prices, alongside a government-imposed cap on diesel refining margins. The resulting sharp decline in petroleum product prices led to a significant inventory loss.
Other expenses recorded a PKR8.5 billion reversals, as excess provisions recognized in previous quarters against inventory gains were reversed following the inventory loss incurred during the current quarter.
The company’s trade debts declined by 9%QoQ (PKR 40 billion) to PKR415 billion, indicating an improvement in collections, with the recovery ratio reaching 105%.
The company recorded a tax reversal of PKR15.3 billion without which net loss would have been PKR38.3 billion (LPS: PKR81.60).
PSO, as expected by the market, posted a very weak result, primarily driven by inventory losses, which remain largely one-off items and can swing significantly depending on the prevailing geopolitical environment.
The current quarter’s loss partially offset the gains recorded in the previous quarter. With oil prices likely to remain volatile amid the ongoing conflict in the Middle East, inventory gains and losses are likely to remain a recurring feature of PSO’s results in the coming quarters.
It is believed that investors should look through this volatility and focus on the underlying fundamentals of the business, including improving market share, a reduction in trade debts, the government’s continued efforts to address outstanding circular debt, and the potential increase in OMC margins, which remain enduring drivers of core profitability going forward.
Urea offtakes declined 14%YoY in August 2026 to 701,000 tons, due to: 1) higher base in the same period last year amid discount offering by companies, 2) monsoon disruptions, and 3) imposition of ban on sale and distribution of urea in parts of KPK and Balochistan. Cumulative offtakes in ongoing Kharif season (Apr-Aug) remain up 3%YoY at 2.8 million tons.
This along with lower production from RLNG-based plants amid temporary closure, eased urea inventory to 709,000 tons as of end August 2026 from the recent peak of 971,000 tons in May 2026.
On the contrary, DAP offtakes declined by 8%YoY during August 2026 to 126,000 tons and down 24%YoY during kharif season. The said decline in DAP was largely due to surge in prices post ME conflict to an all-time high, peaking at PKR16,800/bag, with average prices up 23%YoY during the season. Among other nutrients, CAN sales fell by 3%YoY, while NP sales declined by 49%YoY during the month.
Analysts expect momentum in urea sales to continue going forward, with CY26 projected to close at 6.5 million tons of urea offtakes, driven by sustained demand and supportive budgetary measures.
They maintain an overweight stance on the fertilizer sector, supported by robust earnings, and strong cash flows translating into attractive dividend yields.