Client Name

Lucky Investments Limited

Faculty Advisor

Dr. Azima Khan

SBS Thought Leadership Areas

Investment Decision Making

SBS Thought Leadership Area Justification

This project falls clearly under Investment Decision Making. Deliverables include an investment recommendation founded on a structured valuation, an industry view and a quantified risk assessment. The methods employed (DCF, comparable companies analysis, WACC derivation, sensitivity testing) are the common tool kit of equity research and corporate finance. The outcome is a single number (the target price) and a single rating, which is exactly what an investment decision needs. The project's contribution to this is twofold. It produces an independent assessment of a company's stocks which sell-side analysts have largely ignored in Karachi and establishes a financial model which the client could update as new quarterly results are released. The project also gave the team members the opportunity to consider what it means to make decisions in the face of real uncertainty. It is more difficult to value a business in the middle of a change as the past financials won't necessarily be an accurate reflection of the future. The decisions we were required to make – what multiple of utilization should we use on the comps, how fast is the petroleum throughput to recover from the war shock, what conglomerate discount should we use – are all the judgements that real analysts make on a daily basis.

Aligned SDGs

GOAL 9: Industry, Innovation and Infrastructure

Aligned SDGs Justification

HTL's pivot to domestic blending is a textbook example of moving up the manufacturing value chain in a country that has historically been a price taking importer of finished petroleum products. The 179 plant workers working in FY26 to operate the blending line represent the type of jobs that Pakistan's SDG 9 promises are meant to expand. SDG 8 (Decent Work and Economic Growth) also takes this forward. HTL's Express Centre franchise approach is also creating indirect jobs in automotive services throughout the fuel station network. SDG 12 (Responsible Consumption and Production) is also relevant, but is complicated. Lubricants are a hydrocarbon product and the headline framing is negative. However, in the lubricant business, the synthetic ZIC range from HTL promises longer drain intervals (less waste oil per km driven), the solar array in Lahore offsets about one third of its electricity, and the company has an HSSE framework that includes spillage and waste management at each of the 61 fuel stations. All this does not make any company ‘green' including HTL. It does mean that the operations are nearer the responsible end of a sector that is intrinsically fossil fuel intensive.

NDA

No

Abstract

The Experiential Learning Project values Hi-Tech Lubricants Limited (HTL), a listed downstream petroleum company in Lahore on the Pakistan Stock Exchange. HTL operates in three segments: lubricants (under the South Korean ZIC brand through an exclusive arrangement with SK Enmove), petroleum retail through 61 fuel stations, and polymer packaging. The project was initiated when Lucky Investments Limited, the client, sought an independent equity research opinion on the fair value of HTL following the company's strategic pivot from imports of finished lubricants to onshore blending in November 2024. It was a combination of doing a range of different streams of work. First, an industry study on top-down lubricants and oil marketing business in Pakistan and the world based on company filings, OGRA notifications and information obtained from Mordor Intelligence and credit rating agencies. Second, detailed financial analysis of FY17 to FY25 audited HTL statements and five-year forward financial model to FY30. Third: Two method valuation; Free Cash Flow to Firm DCF based on WACC terminal growth rate and comparable companies analysis using Attock Petroleum and Pakistan State Oil as benchmarks. The fundamental takeaway message is that HTL's local blending pivot is not just a matter of "let's reduce expenses a bit on the margin", but a full-blown shift in the cost base. Pakistan's tariff structure imposes a higher rate of tax on finished lubricant imports than on raw base oil imports, and the cost savings associated with shipping raw materials rather than finished product translates to savings. The main risks are additional increases in the Petroleum Development Levy, depreciation of the PKR against the US dollar, and a below expected ramp-up in lubricant volumes.

Document Type

Restricted Access

Document Name for Citation

Experiential Learning Project

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