PSX: OGDC

OGDC

Deep Dive Investor Analysis | 2025

PKR 265.00
Target: PKR 300 - 320
+20-30% (Total Return)
Strong Buy
6.7x
P/E Ratio
vs Peer Avg 9.1x
5.5%
Dividend Yield
Growing Payout
0.84x
P/B Ratio
Trading Below Book Value
1.12T
Market Cap (PKR)
~USD 4 Billion

Financial Strength (FY25)

Net Margin 42.4% (Sustainable)
Debt-to-Equity 0.48 (Minimal)
Cash Reserves PKR 265 Billion

Strong balance sheet with massive cash reserves (35% of market cap) and minimal debt, providing resilience against volatility.

Valuation & Target

Upside Potential

20% - 30%
Current
265
Target
310
High
350
Consensus Low PKR 250
Intrinsic High PKR 350

Bull Case (Why Buy?)

  • Deep Value: Trading at 6.7x P/E vs. peer average of 9.1x.
  • Attractive Yield: 5.5% dividend yield with growing payout (PKR 15.05 in FY25).
  • Improving Fundamentals: Receivables collection accelerating (129% gas rate).
  • Growth Catalysts: Abu Dhabi offshore exploration, tight gas projects, and new discoveries.

Risk Factors

  • Commodity Volatility: Earnings highly sensitive to global oil prices.
  • Production Decline: Natural decline of -2% to -4% annually requires constant new discoveries.
  • Circular Debt: Persistent issue in the energy sector affecting cash flows.
  • Regulatory Risk: Changes in government policies or taxation.

Peer Comparison

Company P/E Ratio Market Cap Net Margin Div Yield
OGDC 6.7x PKR 1.12T 42.4% 5.5%
Peer Average 9.1x - ~35% ~4-5%
Market Average 15-20x - Variable Variable

Investor Action Plan

Entry Strategy

Accumulate at current levels (PKR 265). The stock is significantly undervalued relative to peers and historical averages.

Time Horizon

3-5 Years. Long-term hold to capture value from new discoveries and dividend compounding.

Risk Profile

Moderate to High. Suitable for investors comfortable with energy sector volatility and commodity price risks.