Meghna Petroleum valuation report: fair value BDT 236–401 (Oct 2026)

Investment case: fair value range BDT 236-401, of which own cash is 60% of the base

Meghna Petroleum is a fuel distributor whose profit is mostly interest. In FY2025 interest on cash and fixed deposits was BDT 6.9bn, 78% of profit before WPPF; the fuel business itself earned BDT 1.9bn [1 p.112].

Meghna Petroleum PLC (DSE: MPETROLEUM) is one of the three listed fuel-marketing subsidiaries of the state-owned Bangladesh Petroleum Corporation (BPC), with Padma Oil and Jamuna Oil. It sold 23.85 lakh tonnes of diesel, octane, petrol, kerosene, furnace oil, jet fuel, lubricants and LPG in FY2025 [1 p.40], about 35% of national fuel sales of 68.35 lakh tonnes reported in Padma's annual report [13 p.31]. BPC owns the product. Meghna earns a gazetted margin per litre, stores and moves the fuel, and collects the cash from customers before it pays BPC. That timing gap, plus 40 years of retained profit, leaves it with BDT 66.1bn of cash and fixed deposits at June 2025, BDT 611 per share against a share price of BDT 211.5 [1 p.111] [8].

We value Meghna at a fair value range of BDT 236-401 per share, base BDT 313 (probability-weighted BDT 316). The base blends a sum of the parts (fuel franchise plus own cash, 50%), a dividend discount model (30%) and a justified price-to-book (20%), all on the same cost of equity of 14.2% and the same sustainable ROE of 10.9%. The share price of BDT 211.5 sits below the whole range: it is 3.4x FY2025 EPS and 0.76x June-2025 book. The gap to our range is mostly about how much of the cash shareholders will ever see, which we discuss in the valuation section.

The main driver of profit is not the fuel margin but the deposit rate. Interest income rose from BDT 4.3bn in FY2023 to BDT 6.9bn in FY2025 as fixed-deposit rates rose to 9.25-12% [1 p.128], while core operating profit moved only from BDT 1.7bn to BDT 1.9bn. We expect EPS to fall from BDT 59.73 in FY2026E to BDT 52.33 in FY2027F as yields ease from about 9.7% to 9.0%, then to grow slowly with the cash pile. The model also carries the fuel side line by line: volume by product, margin per tonne under the gazette, operating costs and the BPC float.

Meghna sells about 35% of Bangladesh's fuel; the state owns 58.67% through BPC

Meghna Petroleum was set up in 1977 and is one of three BPC marketing companies. BPC, a statutory corporation under the Energy and Mineral Resources Division, imports crude oil and refined products, has the crude refined at Eastern Refinery, and hands the products to Padma, Meghna and Jamuna to sell. The government holds 58.67% of Meghna's shares, institutions 33.06%, foreign investors 0.10% and the general public 8.17% [7]. The free float is therefore small and trading thin: about 25,000 shares a day in October 2026, roughly BDT 5mn [8].

Meghna has two reported segments, refined products and lubricants [1 p.41]. In FY2025 the refined-product segment made a net profit of BDT 8.22bn and lubricants BDT 0.59bn, before the allocation of tax [1 p.41]. Lubricants (BP, Castrol and other brands) are a small but steady side line: 5,403 tonnes and BDT 362mn of gross earnings in 9M FY2026 [2 p.7]. It also sells LPG cylinders and bitumen. Its customers are filling stations, agents, packed-point dealers and large state buyers such as power plants and BPC's other companies; receivables from BPC itself were BDT 19.4bn at June 2025 and from other government bodies BDT 2.8bn [1 p.41].

Related-party flows dominate the balance sheet. At June 2025 Meghna owed BPC BDT 67.4bn for product and finance, out of total creditors of BDT 77.2bn [1 p.136]. Because customers pay Meghna before Meghna pays BPC, the company holds what we call the BPC float: creditors less receivables, stock and advances, BDT 35.1bn at June 2025 and BDT 44.1bn at March 2026 (model, from [1 p.111] [2 p.1]). The rest of the cash is the company's own: equity less fixed assets. These two pools are valued differently below.

Government control shows up in three places that matter for valuation. The board is chaired from BPC and the energy ministry; the dividend is set with the state as a 58.67% holder that also needs cash for the budget; and BPC, as both supplier and creditor, decides how fast Meghna must pay for product. None of these is hostile to minority shareholders by design, but each one changes how much of the cash pile can ever reach them.

Meghna's network is built around its main installation at Guptakhal in Chattogram, which receives product from BPC's import terminals and Eastern Refinery, and a chain of up-country depots fed by coastal tankers, rail wagons and river barges. Its directors' report counts about 836 filling stations, 902 agents and 180 packed-point dealers selling Meghna-branded fuel, plus some 1,249 LPG dealers (FY2024 figures cited in the F25 sector spec from the FY2024 annual report). The station owners are private dealers who earn their own gazetted commission; Meghna does not own the retail forecourts, which is why its capex is small (BDT 241mn in 9M FY2026 [2 p.11]) and its fixed assets only BDT 1.9bn.

The gazette sets the margin at Tk0.80-0.90 per litre; Meghna earned BDT 1,335 per tonne in FY2025

Meghna does not set its own prices. Since March 2024 retail fuel prices follow an automatic pricing formula: the import-parity cost (Platts or Dated Brent prices at the payment-day exchange rate), duties and VAT, BPC's costs and margin, the dealer commission and the distributors' margin. At the same time the government raised the distributors' margin on diesel and kerosene from Tk0.50 to Tk0.80 per litre (fixed since 2016) and on octane and petrol from Tk0.60 to Tk0.90, as reported by The Business Standard [10]. In February 2026 the energy regulator BERC began setting the furnace-oil price itself, with a distributor margin of Tk0.71 per litre plus Tk1.20 for transport, also reported by The Business Standard [11].

On a pump price of roughly Tk100-130 per litre, the distributor keeps less than one taka: well under 1%. That is why turnover is huge (BDT 293bn in FY2025) but gross earnings are small (BDT 3.2bn) [1 p.112]. Gross earnings per tonne were BDT 975 in FY2021, 898 in FY2022, 996 in FY2023, 1,142 in FY2024 and 1,335 in FY2025 (model). The step in FY2025 is the first full year of the new gazette. A diesel margin of Tk0.80 is about BDT 950 per tonne; the rest comes from higher-margin octane, lubricants (BDT 67,000 per tonne in 9M FY2026 [2 p.7]), handling gains and a year-end settlement with BPC.

That settlement matters for the quarters. In FY2025 Meghna earned BDT 1,160 per tonne in the first nine months but BDT 1,824 per tonne in the fourth quarter (model, from [1 p.112] and [2 p.7]). In 9M FY2026 gross earnings fell 11% to BDT 1,808mn [2 p.2]: volume fell 7.8% and the per-tonne figure fell to about BDT 1,116, partly because furnace oil (now under BERC) and diesel volumes fell. We build FY2026E gross earnings of BDT 2,825 from the nine-month actuals plus a fourth quarter with FY2025's seasonal volume share and year-end uplift, which gives BDT 1,285 per tonne. We hold that margin flat in the base case: a gazette change is a discrete event, not a trend.

The risk to this structure is the pricing reform itself. The automatic formula makes the distributors' slice an explicit line that the government can revise at any monthly review. Each Tk0.10 per litre is about BDT 119 per tonne and BDT 2.01 of FY2027F EPS (model, Exhibit 33). Our bear and bull cases move it by Tk0.10 per litre either way; the risk table tests a Tk0.20 cut.

Volumes have grown 0.6% a year since FY2021; 9M FY2026 fell 7.8% as furnace oil dropped 41%

Meghna's sales were 23.28 lakh tonnes in FY2021, 24.49 in FY2022, a peak of 26.20 in FY2023, 23.69 in FY2024 and 23.85 in FY2025 [1 p.40]. Diesel is about three-quarters of the tonnage: it fuels trucks, buses, irrigation pumps in the dry-season boro crop (January-April) and back-up generators. Furnace oil, used by oil-fired power plants, was 13.9% of FY2025 volume [1 p.40], and it is the line that is shrinking: in 9M FY2026 Meghna sold 132,000 tonnes of furnace oil against 227,000 a year earlier [2 p.7], as the power board dispatched fewer oil-fired plants.

Diesel volume fell 2.6% in 9M FY2026 to 1.23mn tonnes, octane rose 0.9% and petrol fell 1.2% [2 p.7]. Total volume fell 7.8% to 1.62mn tonnes. We assume FY2026E volume of 2,199 thousand tonnes (the nine months plus FY2025's fourth-quarter share) and then 2% a year growth: GDP and the vehicle fleet push diesel and octane up, while furnace oil has already reset lower. Volume does not change the margin per litre, so a 3% volume swing moves FY2027F EPS by only about BDT 0.5 (Exhibit 33).

Market share is stable because the three BPC companies split the market by depot and region. With national sales of 68.35 lakh tonnes in FY2025 (Padma's annual report [13 p.31]), Meghna's 23.85 lakh tonnes is a 34.9% share, behind Padma's 38.4% [13 p.27]. There is no price competition between them: the price is the same everywhere, so share moves only with depot capacity, BPC allocation and large-buyer contracts.

Three things could change the volume picture. Irrigation diesel depends on the dry-season boro crop and on how fast farmers switch to solar and grid-powered pumps; transport diesel and octane depend on GDP, imports of vehicles and the share of CNG and LPG in the fleet; and furnace oil depends on how many oil-fired power plants the power board runs, which has been falling as gas, coal and imported power take over. We do not model a separate line for each product because the margin per litre is close for all the main fuels; the furnace-oil decline is already in the FY2026E base, and the bear case takes another three points off growth for two years.

Core operating profit was BDT 816 per tonne in FY2025 and falls to 659 in FY2027F

From gross earnings Meghna adds a net operational gain on handling (BDT 211mn in FY2025) and other operating income from handling commission and service charges (BDT 284mn), and pays operating costs of BDT 1,732mn: administration, selling and distribution BDT 1,284mn, financial expenses BDT 253mn and interest charged by BPC BDT 195mn [1 p.112]. Staff are paid on the state pay scale, and costs grew 6.4% a year from FY2020 to FY2025 (model). Core operating profit was BDT 1,947mn, BDT 816 per tonne.

In 9M FY2026 core operating profit fell to BDT 690mn from BDT 960mn [2 p.2] because gross earnings fell while costs stayed flat. We forecast costs growing 6% a year (pay and inflation) against flat margins and 2% volume, so core operating profit drifts from BDT 1,479mn in FY2027F to BDT 1,252mn in FY2031F. Core EPS (core operating profit after 5% WPPF and 20% tax) is BDT 10.39 in FY2027F, against total EPS of BDT 52.33. Without a new gazette, the fuel franchise is a slowly shrinking earner in real terms.

Interest on BDT 66.1bn of cash is 78% of profit; BDT 5.48bn sits in four stressed banks

At June 2025 Meghna held long-term FDRs of BDT 12.57bn, short-term FDRs of BDT 15.70bn, depreciation-fund investments of BDT 1.78bn and cash and bank balances of BDT 36.05bn, BDT 66.1bn in all [1 p.111]. By March 2026 the total had grown to BDT 76.6bn [2 p.1]. Interest on bank deposits was BDT 5,202mn in 9M FY2026 [2 p.8]. The earned yield on average cash was 7.3% in FY2023, 9.6% in FY2024 and 11.2% in FY2025 (model), tracking the rise in bank deposit rates after 2023; Q3 FY2026 annualises to about 9.0%.

Where does the cash come from? About BDT 35.1bn is the BPC float (June 2025) and BDT 28.2bn is the company's own cash, equity less fixed assets (model). The float swings with BPC's payment timing: it was BDT 30.6bn at June 2024 and BDT 44.1bn at March 2026 (model). That is why operating cash flow per share swung from minus BDT 46.17 in FY2024 to plus BDT 109.47 in FY2025 [7]. We hold the float at its three-point average of BDT 36.6bn, so the forecast does not rest on one year's payable timing.

Our interest forecast is the yield times the opening interest-earning balance (cash and FDR less the stressed FDRs). In FY2027F-FY2028F the yield runs on the actual FDR book, locked at 9.25-12% [1 p.128] and repricing as 6-12 month deposits mature: 9.0% and 8.5%. It then fades to the F25 guardrail, the banking-system average deposit rate of 6.21% [9] plus 100bp = 7.2%, by FY2031F, which is the terminal yield in every leg. A 100bp change in the yield moves FY2027F EPS by about BDT 4.7 and fair value by about BDT 35 per share (Exhibit 32).

The credit risk is concentrated. The auditor's qualified opinion on FY2025 names BDT 1,690mn at First Security Islami Bank, BDT 2,117mn at Global Islami Bank, BDT 75mn at Padma Bank and BDT 1,594mn at Union Bank, BDT 5,477mn in all, in banks 'facing severe liquidity crises'. Meghna stopped recognising interest of BDT 613mn on them and asked for encashment without a positive reply, but booked no expected-credit-loss allowance [1 p.105]. The Business Standard reports that Tk2,340 crore of the state oil companies' deposits are stuck in banks being merged [12]. We exclude these deposits from the interest base and haircut them by 30% in the base valuation (50% bear, 10% bull): BDT 15.2 per share in the base.

The cash pile is also where the BPC relationship can bite. BPC itself ran large losses on subsidised fuel before the 2024 formula and has, in the past, relied on delayed payments from its distributors. If BPC's finances improve under the formula, it may collect faster; if they worsen, it may lean on its subsidiaries for funds. Either way, the float is not Meghna's to keep, which is why we value it only through the interest it earns while it lasts and test a BDT 10bn reduction in the risk table.

Pipelines and the pricing formula cut BPC's costs, not Meghna's margin; deposit rates are the policy lever that matters

Bangladesh's downstream oil chain is state-run from end to end. BPC imports about 46 lakh tonnes of refined products and 15 lakh tonnes of crude a year; private condensate fractionation plants add about 5 lakh tonnes (Padma's FY2025 report [13 p.31]). New infrastructure, such as the India-Bangladesh friendship pipeline for diesel, the single-point mooring for crude unloading and Padma's jet-fuel pipeline to Chattogram airport, lowers BPC's import and transport cost. It does not raise the distributors' per-litre margin, and it can shift handling income among them.

For Meghna, three policy levers matter. First, the distributor margin in the automatic formula (above). Second, Bangladesh Bank's interest-rate path: the policy rate and deposit rates rose sharply in 2023-25 and lifted Meghna's interest income by BDT 2.5bn in two years; T-bill cut-offs of 8.6-8.8% in October 2026 [9] point to easing. Third, the bank-resolution programme: deposits in banks that are merged or resolved may be frozen or converted, which is the FDR risk above. Government ownership adds a fourth, less visible lever: BPC can ask its subsidiaries for funds, land or faster settlement, and the board's dividend policy is set with the state as the majority shareholder.

What would a deeper fuel-price reform look like for the distributors? The 2024 formula already passes import costs through monthly, so the distributors carry no price risk on the product itself: BPC owns the stock and the gazette fixes the slice. A move towards open competition among distributors, private import licences for diesel or a shift of furnace-oil supply to power plants' own imports would be the structural threats; none has been announced. The more immediate change is BERC's role: since February 2026 it sets the furnace-oil price after a public hearing, and it could in time take over petrol and diesel pricing too. A regulator that publishes its cost build-up is more likely to question a margin that was raised 60% in one step, which is why our bear case cuts it by Tk0.10 per litre.

Earnings quality: 78% of profit is interest and the FY2025 audit opinion is qualified

Three features of the accounts need care. First, interest is 78% of pre-WPPF profit, so reported EPS is mostly a deposit-rate number. Second, the FY2025 audit opinion is qualified: no expected-credit-loss allowance on the stressed-bank FDRs, the government's BDT 116mn share money deposit not converted to shares as the Financial Reporting Council requires, a VAT payable mismatch and a BDT 18.4bn gap between turnover in the accounts and in VAT returns [1 p.105]. Emphasis-of-matter paragraphs add an asset revaluation that was done but not booked, BDT 3.5bn moved to general reserve without a stated policy, unconfirmed balances at ten banks and no actuarial valuation of gratuity [1 p.106].

Third, cash flow follows BPC's payment timing, not profit. Operating cash flow was BDT 12.8bn in 9M FY2026 against net profit of BDT 4.5bn [2 p.4], because creditors rose. Over FY2024-FY2025 NOCFPS averaged BDT 31.65, about 56% of average EPS [7]. Dividends are well covered: Meghna paid BDT 20 per share for FY2025, 33% of EPS, and has paid 150-200% of face value every year since FY2020 [1 p.39]. The payout ratio has fallen from 58% in FY2021 to 33% because EPS grew faster than the dividend.

We forecast EPS of BDT 59.73 for FY2026E and BDT 52.33 for FY2027F as deposit yields ease

FY2026 has not been reported. The board meets on 2 November 2026 to approve the audited statements [7], so our FY2026E is built from the nine-month actuals plus a modelled fourth quarter: nine-month EPS was BDT 41.51 (Q1 14.29, Q2 14.30, Q3 12.92) [7] [2 p.2], and we add a fourth quarter of BDT 18.22. That fourth quarter is built from named drivers: volume at FY2025's fourth-quarter share (35.8% of nine months), gross earnings per tonne with FY2025's year-end uplift (1.57x; this rests on FY2025 alone, as the FY2024 quarterly split was not checked), fourth-quarter costs and other income at FY2025's level, and interest at the Q3 run-rate. FY2025's fourth quarter was BDT 23.33, so our Q4 is lower, mainly because interest income is held at the Q3 rate. The model will be updated when the FY2026 annual report is filed.

From FY2027F the forecast is mechanical and driver-based. Gross earnings = volume x margin per tonne; costs grow 6%; interest = yield x opening interest-earning cash; WPPF 5% and tax 20% of profit. Net profit falls from BDT 6.5bn in FY2026E to BDT 5.7bn in FY2027F (yield from about 9.7% to 9.0%) and BDT 5.6bn in FY2028F, then grows to BDT 5.2bn by FY2031F as the cash pile grows with retained profit. With a 45% payout, DPS is BDT 23.55 in FY2027F against BDT 20 paid for FY2025. Cash and FDR rise from BDT 71.7bn at June 2026 to BDT 86.1bn at June 2031; the cash roll-forward ties to the balance sheet in every year (model check row).

Our FY2027F EPS of BDT 52.33 is -5% vs the nine-month run rate of BDT 55.35 and 26% vs the FY2021-FY2025 average of BDT 41.54. There is no published management guidance.

The balance sheet follows from the same drivers. Fixed assets grow by capex of BDT 320mn less depreciation of BDT 180mn a year. The BPC float and other liabilities are held flat. Equity grows by profit less the dividend paid in the year (the prior year's DPS times 108.2mn shares). Cash and FDR is what is left: equity plus the float plus other liabilities less fixed assets, and a separate cash-flow roll-forward (profit + depreciation + change in float - capex - dividends) lands on the same number in every year.

Line by line, the forecast reads as follows. Gross earnings move with volume (+2% a year) because the margin per tonne is held at the FY2026E level. The net operational gain on handling is held at 7% of gross earnings, close to its FY2021-FY2025 median. Other operating income (handling commission and service charges) is held at BDT 230mn, close to the FY2026E level after a fall in 9M FY2026 [2 p.8]. Operating costs rise 6% a year with state pay scales and inflation. Interest income is the yield times the interest-earning cash at the start of each year, excluding the BDT 5.48bn of stressed deposits, plus BDT 10mn of house-loan and jetty income. WPPF is 5% of profit and tax 20% of profit before tax, the listed-company rate the company has paid (20.6% in FY2025, 19.8% in 9M FY2026).

Fair value range BDT 236-401 (base 313): the fuel franchise plus own cash after a trapped-cash discount

Sum of the parts applies here (skill rule: different assets valued on different bases). Meghna has two assets. The fuel franchise earns the gazetted margin and the interest on the BPC float, which exists only because Meghna distributes BPC's product. Own cash is the shareholders' retained money. We value the franchise on FY2027F earnings of BDT 3,628mn after WPPF and tax at a justified P/E of 10.0x = (1 + g) / (Ke - g) with g 4% and Ke 14.2% (10.2x, capped at the top of the F25 8-10x band). Reinvestment is zero because the franchise runs on BPC's money: capex roughly equals depreciation and working capital is negative, so growth needs no new equity. But only 45% of earnings is paid out; the rest joins the cash pile, so we multiply by a distribution factor of 66% = payout + retention x after-tax cash yield / Ke, the same payout as the DDM: BDT 222 per share.

Own cash at June 2026E is BDT 299 per share. We deduct the 30% haircut on stressed FDRs and then a trapped-cash discount of 34% = retention (55%) x (1 - after-tax yield 5.5% / Ke 14.2%). The logic: cash paid out is worth its face value; cash kept earns 5.5% after tax, below the 14.2% shareholders require, so it is worth less than face. That gives BDT 188 per share and a sum of the parts of BDT 410.

The DDM discounts DPS for FY2027F-FY2031F and a terminal value of EPS x (1 + g) x (1 - g/ROE) / (Ke - g), less the haircut: BDT 224. The justified P/B of 0.67x = (ROE - g)/(Ke - g) on book less the haircut gives BDT 204. Residual income charges Ke on the same adjusted book. The trapped-cash discount is an override of F25 §G, which values net cash at book less the haircut. We override it because Meghna pays out only 33-58% of EPS and the retained cash earns 5.5% after tax at the terminal yield, below Ke; it is not a double count with the lower yield, because the franchise leg contains no own-cash interest. Reconciling the legs: all three use the same Ke and g; the DDM and P/B legs use the whole-company ROE. The DDM and P/B legs value the retained cash at what it earns, so they treat all of it as trapped; the SOTP treats 45% of it as paid out over time and the franchise as needing almost no capital. The remaining BDT 187 gap between SOTP and DDM is the value of eventually releasing the cash: the SOTP values today's own cash at book less the discount on the retained share (as if a future board pays it out), while the DDM and P/B legs value only the dividend stream at a 45% payout and a terminal ROE below Ke. We keep the F25 weights of 50/30/20: the SOTP is the only leg that separates the fuel franchise from the cash and prices each on its own return, which is the question for a state distributor; the DDM (30%) anchors the value to what minority holders actually receive under current policy; the P/B (20%) is a cross-check on the same ROE. Blended: BDT 313.

Sustainable ROE against history. Meghna's ROE was 16.9% in FY2021, 17.5% in FY2022, 21.8% in FY2023, 23.1% in FY2024 and 24.0% in FY2025 (model). Our FY2031F ROE of 10.9% (bear 9.6%, bull 12.3%) sits below that range, and we state the reason: equity has grown from BDT 16.0bn to BDT 30.1bn in five years because only a third of profit was paid out, and as deposit yields fall from 11% to the 7.2% guardrail that extra equity earns 5.5% after tax. The FY2021 ROE of 16.9% was earned on equity of BDT 17bn against cash of about BDT 29bn; by FY2031F equity is larger than the interest-earning own cash it funds, so a return near the deposit rate is the arithmetic outcome, not a forecast of weaker management. The FY2023-FY2025 ROE was lifted by a deposit-rate peak; a payout policy change (the 70% payout risk shock) is what would bring ROE back into the historical range.

Cost of equity. The 10-year bond cut-off was 9.268% on 25 October 2026 [9]. Meghna's raw two-year weekly beta against DSEX is 0.26 (R-squared 0.17), Blume-adjusted 0.50; the stock barely trades and is two-thirds state-held, so we reject the raw figure and apply the F25 sector floor of 0.7 (the sector spec overrides the general 0.6 floor). With an equity risk premium of 7%, Ke is 14.2%.

Scenarios. Bear and bull move the same drivers as the risk table, by plausible one-in-four sizes, and fade back so that the terminal ROE stays close to the base: yield -/+200bp for two years (F25 spec), fading to the same 7.2% by FY2031F; margin -/+Tk0.10 per litre; volume -/+3pp for two years; float -/+BDT 5bn; payout 35%/55%; haircut 50%/10%. Ke is the same in all three. Bear BDT 236, base BDT 313, bull BDT 401; probability-weighted BDT 316. A stacked stress (bear drivers plus yields 300bp lower plus a full loss on the stressed FDRs) gives BDT 128, shown outside the range. The current price of BDT 211.5 is below the bear case: the market prices Meghna at 3.5x FY2026E EPS, which is consistent with treating most of the cash as permanently trapped and the stressed deposits as largely lost.

Reverse check. At BDT 211.5, if the fuel franchise is worth our BDT 222, the market gives own cash almost nothing; if own cash is valued at our BDT 188, the franchise is worth only BDT 23 per share, about 0.7x franchise earnings. Over FY2020-FY2025 the June-end trailing P/E averaged 5.3x and fell from 5.5x to 3.3x as EPS doubled and the price stayed near the 2022-24 floor of BDT 198.6 [8].

Why not a multiple of peers? The two other BPC distributors share the same business model, regulation and FDR problem, so they are useful context but not an independent anchor: their prices embed the same trapped-cash discount we are trying to measure. Regional fuel marketers such as Pakistan State Oil or Attock Petroleum own their margins, inventories and debt, and carry no deposit float, so their multiples do not translate. We therefore use no peer-multiple leg and show Padma's FY2025 figures only as context.

Six risks move fair value between BDT 245 and 377; lower deposit yields cost the most

Each risk below is run through the model as a single change, base otherwise. Lower deposit yields are the largest and most likely: 200bp lower in every year cuts FY2027F EPS to BDT 43.03 and fair value to BDT 245. A margin cut in the pricing formula of Tk0.20 per litre takes FY2027F EPS to BDT 48.32 and fair value to BDT 286. BPC dues: if BPC collects BDT 10bn of its payables faster, interest falls and fair value goes to BDT 275.

Bank losses: a full loss on the BDT 5.48bn in four stressed banks takes fair value to BDT 286; the P&L would also take an impairment that the model does not book in the base. Volume 5% lower from FY2027F costs only BDT 7 per share. The upside risk is payout: if the government, as 58.67% owner, asks for 70% of profit, fair value rises to BDT 377 because less cash is trapped. Governance items without a model line (unbooked revaluation, VAT mismatch, BPC-directed transactions) are context.

Two further risks are real but have no clean model line. A forced transaction with BPC (for example, the land sale to BPC proposed at Padma Oil) could move cash or assets at a price the minority does not set. And the unbooked asset revaluation the auditor mentions could, if booked, raise book value without changing cash or earnings. On the upside, a new gazette that raises the distributor margin again, as in 2024, would add about BDT 119 per tonne per Tk0.10 and is the main bull driver on the fuel side.

What to watch: four signposts for the FY2026 results and the year after

• FY2026 EPS against our BDT 59.73 (board meeting 2-Nov-2026) and the dividend against BDT 20.91.
• Interest income per quarter against our 9.0% yield for FY2027F (BDT 1,493 mn a quarter).
• Any gazette or formula change to the Tk0.80/0.90 per litre distributor margin.
• Recovery, conversion or impairment of the BDT 5.48bn in the four stressed banks; the auditor's FY2026 opinion.

This report uses the FY2025 audited statements and the 9M FY2026 interim statements; FY2026E is a model estimate. The model will be updated in place when the FY2026 annual report is filed.

Financials: six years of history and five forecast years

FAQ

How does Meghna Petroleum make money?

It distributes BPC-owned fuel for a gazetted margin (Tk0.80 per litre on diesel, Tk0.90 on octane/petrol since March 2024) and earns interest on a large cash and FDR book; interest was 78% of FY2025 pre-WPPF profit.

What is Meghna Petroleum's fair value?

Our fair value range is BDT 236-401 per share with a base of BDT 313, from a sum of the parts, a dividend discount model and a justified P/B.

Why does the share trade below its cash per share?

Most of the cash is BPC's float or retained by a state-controlled board that pays out about a third of EPS; the market treats it as trapped and doubts deposits in stressed banks.

What happens if fuel prices are reformed?

The distributor margin is a line in the automatic pricing formula. A Tk0.20 per litre cut lowers FY2027F EPS to BDT 48.32 in our model.

When are the FY2026 results?

The board meets on 2 November 2026 to approve the FY2026 audited statements; our FY2026E EPS is BDT 59.73.

Sources

1. Meghna Petroleum Limited, Annual Report 2024-25 (audited financial statements, year to 30-Jun-2025) · link · accessed 2026-10-31
2. Meghna Petroleum Limited, un-audited financial statements, nine months to 31-Mar-2026 · link · accessed 2026-10-31
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