Padma Oil valuation report: fair value BDT 194–249 (Oct 2026)

Fair value range BDT 194–249 (base 221): own cash is 64% of the sum of the parts; the fuel margin is the smaller part

Padma Oil PLC (DSE: PADMAOIL), renamed from Padma Oil Company Limited in May 2025 [5], is the largest of the three state fuel-marketing companies owned by Bangladesh Petroleum Corporation (BPC), alongside Meghna Petroleum and Jamuna Oil. It distributes BPC's diesel, jet fuel, octane, petrol, kerosene and furnace oil through 22 depots, filling stations and agents, and it is the sole supplier of jet fuel at the three international airports [1 p.36]. It earns a commission per litre fixed by government gazette and never owns the fuel: BPC sells it the product at cost and takes back the sale value less the margin. In FY2025 (year to June) Padma sold 26.27 lakh tonnes, 38.43% of the country's fuel sales, and kept BDT 3.07bn of net earnings on petroleum products [1 p.27] [1 p.102].

That margin covers costs with a small surplus. After administration, distribution, depreciation and financial charges, total operating profit was BDT 1,331mn in FY2025. Profit before WPPF was BDT 7.4bn because Padma earned BDT 6.1bn of non-operating income, which is interest on short-notice deposits (SND) and fixed deposits (FDRs) [1 p.102] [4 p.6]. Non-operating income was 82% of pre-WPPF profit. The cash comes from two places: BDT 27.0bn of shareholders' equity and a large float of money owed to BPC and its affiliates for product, BDT 57.1bn at June 2025 [1 p.101].

FY2025 EPS was a record BDT 57.30, and the nine months to March 2026 ran ahead again at BDT 44.02 against 40.20 [4 p.8] [5]. Two things changed underneath. Interest stayed high as Padma's deposits re-priced at 2025 rates. And the margin mix shifted: jet fuel earned BDT 1.18bn of net earnings in the nine months against BDT 0.55bn a year earlier, while diesel fell to BDT 0.83bn from 1.17bn and petrol to BDT 94mn from 436mn [4 p.5]. Our model puts FY2026E EPS at BDT 58.38 and FY2027F at 54.60, as deposit yields ease from their 2025 peak toward 7.2% by FY2031F [11].

We value the shares at a fair value range of BDT 194–249, base BDT 220.7 and probability-weighted 221.2, from a sum of the parts (50%), a dividend discount model (30%) and justified price-to-book (20%), at a 14.5% cost of equity [11]. The price of BDT 197.5 (29-Oct-2026) [9] sits inside the range, 11% below the base and close to the bear value. In the base sum of the parts, own cash after a 30% haircut on the stressed banks and a trapped-cash discount comes to BDT 158 a share; the fuel franchise, which includes interest on the BPC float, is BDT 91. The answer therefore rests on deposit rates, on whether BPC keeps leaving its money with Padma, and on how much of its profit the board pays out. The latest period used is the nine months to 31-Mar-2026; FY2026 audited statements have not been filed (the board meets on 05-Nov-2026) and the model will be updated when they are.

Padma sells 38.4% of Bangladesh's fuel; BPC is its majority owner, its supplier and its biggest creditor

Bangladesh's downstream oil chain is state-run. BPC imports crude and refined product, Eastern Refinery processes the crude, and the three marketing subsidiaries sell the product. National fuel sales were 68.35 lakh tonnes in FY2025, up 1.09%; 46.08 lakh tonnes of refined product and 15.11 lakh of crude were imported and 7.07 lakh came from local gas fields and fractionation plants [1 p.31]. Padma sold 26.27 lakh tonnes (38.43%), Meghna 23.85 lakh [8] and Jamuna 17.21 lakh [7]. Padma ranked first among the marketing companies [1 p.27].

Padma's network is the widest: a main installation at Patenga, nine riverine, six rail-head and four aviation depots, an automated depot at Cumilla and a pipeline-fed depot at Brahmanbaria gas field, with 3.08 lakh tonnes of storage against 2.46 lakh at Meghna and 2.27 lakh at Jamuna [1 p.36]. It is the only jet-fuel supplier at Dhaka, Chattogram and Sylhet airports and took over Cox's Bazar in 2023; an underground jet-fuel pipeline from Patenga to Shah Amanat airport started operating on 22-Jul-2025 [1 p.27] [1 p.36]. Padma also sells agrochemicals through 400 distributors, a small, near-breakeven line (BDT 5.3mn of operating profit in FY2025) [1 p.102].

BPC holds about 50.35% of the shares (per the F25 sector file; the directors' report shareholding page was not readable in our corpus and we list it as a gap), and appoints the chairman through the Energy and Mineral Resources Division: Md. Wasim Jabber, a former additional secretary, became chairman on 20-Jul-2026 and Md. Mafizur Rahman managing director on 17-May-2025 [5]. BPC is also on both sides of the business: Padma owed affiliated companies (BPC) BDT 57.1bn at June 2025 and 48.3bn at March 2026 [4 p.1], and BPC pays Padma handling commission on its own imports (BDT 172.5mn in nine months) [4 p.6]. Shares traded about 10,000–20,000 a day in Sep–Oct 2026 [9]; market value at BDT 197.5 is BDT 19.4bn.

Capital actions in the last 24 months were limited to cash dividends (140% for FY2024, 160% for FY2025), an EGM in January 2025 to adopt the PLC name, and board changes; there were no rights issues, bonus shares, bonds or placements, and the share count is 98,232,750 [4 p.8] [5]. Authorised capital is BDT 1.0bn against BDT 0.98bn paid up [1 p.54]. No sector regulator caps Padma's dividend; the board sets it under a policy that lists liquidity, capital expenditure and "special orders or directives issued by the government" among its factors [1 p.87]. The dividend has been a percentage of face value rising slowly (125% to 160% in five years) rather than a share of profit [1 p.54]. One pending corporate action matters: in December 2023 the board proposed selling land leased to BPC to BPC for BDT 1,770.7mn, subject to shareholder approval; the lease advance of BDT 1,458.6mn sits in liabilities [1 p.95].

History explains the price. Over FY2020–FY2025 profit after tax rose from BDT 2.73bn to 5.63bn and NAV per share from BDT 157.64 to 274.86 [3 p.97] [1 p.54], while the June share price fell from BDT 214 (FY2022) to 183 (FY2025) [1 p.54]. Most of the profit growth came from interest income, which rose from BDT 2.62bn in FY2022 to 6.08bn in FY2025 as deposit rates rose; total operating profit also recovered, from BDT 411mn in FY2021 to 1,331mn in FY2025, after the 2024 margin gazette. The market has priced Padma as a deposit book of uncertain distribution, not as a growing business.

The gazette fixes the margin per litre; Padma kept Tk1,170 a tonne in FY2025, with jet fuel now the richest product

Fuel prices in Bangladesh are set by the government. Since March 2024 an automatic formula resets pump prices monthly from import parity (Platts/Dated Brent at the payment-date exchange rate) plus duties, BPC costs, transport and the dealer and marketing-company commissions. The marketing companies' slice is fixed by gazette: in March 2024 it rose to Tk0.80 a litre for diesel and kerosene and Tk0.90 for octane and petrol, the first rise since 2016, as reported by The Business Standard [6]. The automatic formula moves BPC's price, not Padma's margin: the margin moves only when a new gazette is issued.

Padma's quarterly notes show the gazette at work and also a change in mix. In the nine months to March 2026 Padma sold 1,066,887 tonnes of diesel for BDT 124.3bn and paid BPC BDT 123.5bn, a gross margin of BDT 833.5mn, or Tk781 a tonne, about Tk0.66 a litre at 1,190 litres a tonne (our density assumption) [4 p.5]. Jet fuel earned far more: BDT 1,182.8mn on 450,872 tonnes, Tk2,623 a tonne, against Tk1,342 a tonne a year earlier. Petrol earned only BDT 94mn against 436mn. The filing does not explain the shift; jet fuel is priced by BPC separately from the automotive formula, and we treat the nine-month mix as the FY2026 run rate without extrapolating it.

Net earnings per tonne across all products were Tk1,113 in FY2020, Tk857–907 in FY2022–FY2023, then Tk1,176 in FY2024 and Tk1,170 in FY2025 as the 2024 gazette took effect [3 p.98] [2 p.102] [1 p.102]. In the nine months to March 2026 they were Tk1,308 a tonne, because Padma books the year's operational (evaporation and handling) loss at year-end: in FY2025 the fourth quarter earned Tk802 a tonne against Tk1,296 in the first nine months, after an operational loss of BDT 99.6mn [1 p.102] [4 p.2]. Unlike Meghna and Jamuna, where the fourth quarter carries a positive settlement, Padma's fourth quarter is weaker. We hold the margin flat in taka from FY2026E (Tk1,180 a tonne) in the base case: a gazette change is a scenario, never the base. Each Tk0.10 a litre is worth about BDT 2.47 of FY2027F EPS [11].

Volume grew from 19.63 lakh tonnes (FY2020) to 26.27 (FY2025); 9M FY2026 was flat, with diesel at 54% of tonnes

Padma's volume has grown with the economy and with aviation: 19.63 lakh tonnes in FY2020, 21.40 in FY2021, 25.45 in FY2022, a peak of 26.89 in FY2023, 25.95 in FY2024 and 26.27 in FY2025 [3 p.73] [2 p.70] [1 p.72]. That is a 6.0% a year compound growth rate from the Covid year, or about 1% a year from FY2022. Diesel was 54% of tonnes in the nine months to March 2026 and grows with trucks, buses, irrigation pumps and backup generators. Jet fuel (23%) follows air traffic; furnace oil (8%) goes mainly to oil-fired power plants and swings with their dispatch; octane and petrol (13%) grow with the car and motorcycle fleet [4 p.5].

In the nine months to March 2026 volume was 1,958,634 tonnes against 1,955,924 (+0.1%): jet fuel rose 11.0% to 450,872 tonnes and octane 14.0%, while diesel fell 1.9%, furnace oil 17.1% and kerosene 33.3% [4 p.5]. The third quarter alone fell 6.3% (677,030 against 722,345 tonnes) [4 p.2]. We take FY2026E volume at 26.31 lakh tonnes (nine months grossed up by FY2025's fourth-quarter share) and grow it 2% a year from FY2027F, in line with diesel's long-run trend and GDP. Bear and bull move volume growth by 3 points for two years and fade back. Volume matters less than it looks: a 3% volume change moves FY2027F EPS by only about BDT 0.72 [11].

Total operating profit was Tk507 a tonne in FY2025 and drifts to Tk383 by FY2031F as costs outrun a fixed margin

Padma's costs are mostly people and depots. Administrative, selling and distribution expenses including depreciation were BDT 2,018mn in FY2025, lower than BDT 2,167mn in FY2022 because headcount fell from 930 to 810 [1 p.54] [1 p.102]. We grow them 5% a year from FY2027F, below CPI near 8%, on the same basis as the sister models. Financial expenses, BDT 369mn in FY2025 and BDT 345mn in FY2026E, are BPC's finance charge and interest on the workers' profit fund held by the company [1 p.102]; we hold them at BDT 370mn.

Other operating income is larger at Padma than at its peers: profit on handling BPC's imports, handling commission on gas-field condensate, rent from filling and power stations and service charges, BDT 644mn in FY2025 including agrochemicals and BDT 563.8mn in the nine months to March 2026 [4 p.6]. We hold it at BDT 640mn. Put together, total operating profit was BDT 1,331mn in FY2025 (Tk507 a tonne), BDT 1,368mn in FY2026E and drifts to BDT 1,111mn by FY2031F in our base case: a margin fixed in taka does not keep up with 5% cost growth on 2% volume unless the government issues another gazette. Core EPS is BDT 10.13 in FY2027F [11].

Interest on BDT 56bn of SND and FDRs is most of the profit; BDT 1.93bn of it sits in five stressed banks

At June 2025 Padma held BDT 50.9bn in cash and cash equivalents, which in its accounts are mostly short-notice deposits and FDRs, plus BDT 2.5bn of FDRs earmarked for the depreciation fund and BDT 3.0bn of long-term FDRs: BDT 56.4bn in all [1 p.101]. Interest on this book was BDT 6.08bn in FY2025. Measured on the average book, that is a 10.7% yield, against 7.4% in FY2024 and the 9.27% ten-year government bond [10], because 2024–25 term-deposit rates were high. In the nine months to March 2026 interest was BDT 4.59bn (SND 2.60bn, FDR 1.99bn) on a book that ended at BDT 53.7bn [4 p.1] [4 p.6]; the third quarter's BDT 1.55bn is a 12.0% annualised yield on the performing book.

Some of the banks are weak. The auditor's qualified opinion lists FDRs of BDT 795mn at Global Islami, 559mn at Union, 356mn at First Security Islami, 160mn at Social Islami and 60mn at National Bank, banks that Bangladesh Bank is merging because of severe liquidity stress; Padma had asked for encashment without a positive response, BDT 47mn of interest was overdue and BDT 23mn was not accrued [1 p.95]. The total, BDT 1.93bn, is BDT 20 a share, 10% of the share price, and 3.4% of the book. Management's reply is that the banks remain licensed and interest receipts continue, citing a Bangladesh Bank notification of 1-Dec-2025 [1 p.55]. The exposure is a tenth of Jamuna's BDT 15.4bn [7].

Our base interest-yield path on the performing book (cash less the stressed BDT 1.93bn, which we assume earns nothing) is 10.0% in FY2027F and 9.0% in FY2028F while locked FDRs run off, then fades to 7.2% by FY2031F: Bangladesh Bank's weighted-average deposit rate of 6.21% plus 100bp, the F25 guardrail [10]. Interest income is BDT 5.75bn in FY2027F, against BDT 6.08bn in FY2025 [11]. In the valuation we deduct 30% of the stressed balances in the base case, BDT 5.9 a share: the bottom of the F25 30–50% band, because the principal is a claim on banks under Bangladesh Bank resolution rather than written off, the lost interest is already out of our EPS, and the amount is small relative to the book. The bear case uses the band top (50%); the bull 10% assumes recovery.

Fuel pricing reform moves BPC's price monthly; a margin gazette, jet-fuel pricing or BPC's collection policy would move Padma's profit

Four policy items reach Padma's income statement. First, the margin gazette: the automatic pricing formula leaves the marketing commission fixed until the government revises it, as it did in March 2024 after eight years [6]. A review could go either way, so our bear and bull cases move the margin by Tk0.10 a litre, worth about BDT 2.47 of FY2027F EPS. Second, jet fuel: it is now Padma's largest single source of margin, and Padma is the sole airport supplier; any change in how BPC prices aviation fuel, or a private entrant at the airports, would hit Padma alone among the three companies. Third, deposit rates: Bangladesh Bank's tight policy kept term-deposit rates high in 2024–2026; as inflation falls (8.48% in June 2025 [1 p.31]) they will ease, which is the largest single driver of Padma's EPS.

Fourth, BPC's own cash needs. The float exists because BPC leaves sale proceeds with its marketing companies; Padma owed affiliates BDT 82.6bn at June 2023, 57.1bn at June 2025 and 48.3bn at March 2026 [2 p.101] [1 p.101] [4 p.1], and the net float after receivables and inventory fell from BDT 30.7bn to 20.4bn. Operating cash flow was minus BDT 5.4bn in the nine months to March 2026 because "due to affiliated companies" fell [4 p.8]. If BPC collects BDT 10bn more and keeps it, interest income falls and our base fair value drops to BDT 190. The government can also ask for higher dividends from state companies; a 60% payout instead of 38% would raise our base to BDT 264, because cash paid out escapes the trapped-cash discount.

The fuel market itself is changing slowly. Pipelines (the single-point mooring at Chattogram, the India–Bangladesh Friendship Pipeline and the jet-fuel line from Pitolganj to Kurmitola) add 2.38 lakh tonnes of storage capacity and cut BPC's transport costs [1 p.36]; they do not change the marketing margin, but they can shift depot throughput between the three companies. Padma's own Patenga–airport jet line, running since July 2025, saves road transport on its highest-margin product [1 p.27]. Oil-fired power plants are being run less as gas, coal and imported power take over, which is why furnace oil fell 17% in 9M FY2026 [4 p.5]. An automation project for the three companies' Chattogram main installations is awaiting ministry approval [1 p.27].

Shariah screens are relevant to the earnings mix: about four-fifths of pre-WPPF profit is interest, so the share is unlikely to pass an Islamic screen. For conventional investors the share is a claim on a state-controlled deposit book whose size depends on BPC's working-capital policy, whose yield depends on Bangladesh Bank's policy rate, and whose distribution depends on a board appointed by the state.

Earnings quality: 82% of FY2025 pre-WPPF profit was interest, and the FY2025 audit was qualified on four matters

The FY2025 auditors (M M Rahman & Co and Mahamud Sabuj & Co) qualified their opinion on four matters [1 p.95]. First, no expected-credit-loss allowance on the BDT 1.93bn in merging banks. Second, the BPC land: an advance of BDT 1,620.7mn received for a 40-year lease is carried as a liability (BDT 1,458.6mn left), while the board has proposed selling the land to BPC for BDT 1,770.7mn and has not recognised BDT 81.0mn of lease rent for FY2024–FY2025. Third, Biman Bangladesh Airlines: under a November-2019 agreement Biman owes an agreed stuck-up balance of BDT 21,082mn (principal 14,495mn plus 8% interest 6,587mn), of which Padma had received BDT 4,521mn (21.4%) by June 2025; Padma treats the interest as a contingent asset, which the auditor says should be recognised. Fourth, Bangladesh Railway owes BDT 1,722mn under interest-bearing agreements. The first is a downside; the second and third are possible upsides that the accounts do not include.

The Biman claim is the largest. If receipts went to principal, about BDT 10.0bn of principal is still outstanding (our estimate), sitting in accounts receivable. A state airline under a signed schedule is unlikely to default outright, so the base case assumes no loss; a 25% loss on that principal would cut our base fair value to BDT 202. Recovering the BDT 6.6bn of contractual interest, if ever paid, would add about BDT 51 a share after WPPF and tax; we give it no value.

Cash flow swings with BPC's payment timing. NOCFPS was BDT (51.99) in FY2023, 63.82 in FY2024 and (39.83) in FY2025 [5], against EPS of 35.58, 41.59 and 57.30; in the nine months to March 2026 it was BDT (54.86) [4 p.4]. Over the three years cumulative operating cash flow was about minus BDT 2.7bn against BDT 13.2bn of profit, because BPC and suppliers were paid down and receivables rose; F25 §C.5 warns against reading any single year. Dividends of BDT 1.57bn for FY2025 were 28% of profit and are covered many times by interest alone [1 p.40].

We forecast EPS of BDT 58.38 in FY2026E and 54.60 in FY2027F, against 57.30 in FY2025, as deposit yields ease

FY2026E is built from the nine-month actuals plus a fourth quarter from drivers, because the year is not yet filed and no FY2026 EPS has been announced (the board meets on 05-Nov-2026) [5]. Fourth-quarter volume is the nine months times FY2025's fourth-quarter share (0.343); fourth-quarter net earnings per tonne carry the same year-end operational-loss booking seen in FY2025 (0.62 times the nine-month rate); other income, costs and financial expenses take FY2025's fourth-quarter amounts; interest runs at the third-quarter rate; tax is 20% [4 p.2] [1 p.102]. That gives fourth-quarter EPS of BDT 14.36 against 13.46 in the third quarter and 17.10 in the fourth quarter of FY2025; FY2026E EPS is BDT 58.38 [11]. No residual line is needed because there is no announced figure to match.

From FY2027F each line has its own driver: net earnings = volume (+2% a year) × net earnings per tonne (flat at the gazette); costs +5% a year; other operating income BDT 640mn; financial expenses BDT 370mn; interest = yield × opening performing cash; WPPF 5%; tax 20%. EPS is BDT 54.60 in FY2027F and 45.98 in FY2031F. The cash book is rolled forward from the same numbers: equity grows by profit less dividends at a 38% payout (the five-year median), the BPC float is held at the three-point average of BDT 25.8bn, and capex is BDT 800mn a year. ROE falls from 22.6% in FY2025 to 10.2% by FY2031F, against an FY2021–FY2025 range of 14.0%–22.6% (median 18.5%), because yields fade to 7.2% while retained cash keeps growing the equity base [11].

How our normalised numbers compare with Padma's own record: ROE on average equity was 14.3%, 14.0%, 18.5%, 19.1%, 22.6% in FY2021–FY2025 (model Ratios, from the filings), rising with rates [1 p.54]. Our base FY2031F ROE of 10.2% sits below that range for two stated reasons: the terminal yield of 7.2% is below anything Padma earned in FY2025, and equity grows to BDT 45.8bn because 62% of profit is retained into cash that earns about 5.5% after tax. Padma's reported return on shareholders' funds was 13.6–13.8% in FY2021–FY2022 [1 p.54], when FDR rates were capped at 6% [3 p.73], the nearest historical analogue to our terminal. Net earnings per tonne of Tk1,180 compares with Tk857–1,113 in FY2020–FY2023 and Tk1,170–1,176 in FY2024–FY2025; the step reflects the 2024 gazette, which is in force. Payout of 38% compares with 28–54% over FY2021–FY2025. Non-operating income stays near 81% of pre-WPPF profit, against 73–87% in FY2020–FY2025.

Seasonality matters for reading quarters. The irrigation season (January–April) lifts diesel, the monsoon quarter is the weakest, and the fourth quarter (April–June) carries the year's operational loss, which makes Padma's fourth-quarter fuel margin weaker than its first nine months [1 p.102] [4 p.2]. Interest income is steadier: BDT 1.5–1.8bn a quarter in FY2025–FY2026 [4 p.6]. Quarterly EPS of BDT 13–17 should be read against that pattern.

Why below the last twelve months: the run rate includes the 2025 deposit-rate peak; our FY2027F yield of 10.0% is two points below the third quarter's 12.0% annualised rate, and the third quarter itself was 12.4% below a year earlier [4 p.6].

Fair value BDT 194–249: SOTP BDT 249, DDM 199 and P/B 183, blended to 221

Cost of equity is 14.5%: the 9.268% ten-year bond yield of 25-Oct-2026 [10], plus a beta of 0.75 times a 7.0% equity risk premium. The raw two-year weekly beta against DSEX is 0.62 (R² 0.34, dividend-adjusted), Blume-adjusted 0.75; the F25 sector floor of 0.7, which overrides the general 0.6 floor, does not bind for Padma, so we use the Blume figure [9]. Terminal growth is 4% in every leg: volume about 2% plus some nominal drift, below nominal GDP because the margin is fixed in taka between gazettes.

Why a sum of the parts: the skill rule calls for one when a part is material and is valued differently. It applies here: own cash is about two-thirds of the value and depends on bank credit and on how much is paid out, not on fuel margins. Padma holds no listed or material equity stakes, so there are two parts.

Sum of the parts (50% weight): (1) the fuel franchise: FY2027F total operating profit after WPPF and tax (BDT 995mn) plus after-tax interest on the BPC float (BDT 1,412mn), times a justified P/E of 6.02x = (1 − g/ROE)(1 + g)/(Ke − g) at the sustainable ROE of 10.2%, times a distribution factor of 61.4% = payout 38% + retention × after-tax yield (5.5%) / Ke, the same payout as the DDM, because retained franchise earnings join the cash pile and are worth only yield/Ke; BDT 91 a share. Float interest is capitalised at the 7.2% terminal yield, not today's rate. (2) Own cash, equity less fixed assets (BDT 263 a share at June 2026E), less the 30% haircut, less a trapped-cash discount of 38.6% = retention × (1 − after-tax yield / Ke); BDT 158 a share. Total BDT 249. This is the same method as our Meghna and Jamuna reports.

Dividend discount (30%): dividends at the 38% payout for FY2027F–FY2031F plus a terminal value of FY2031F EPS × (1 + g) × (1 − g/ROE)/(Ke − g), less the stressed-bank haircut: BDT 199. Justified P/B (20%): (ROE − g)/(Ke − g) = 0.59x on June 2026E book less the haircut: BDT 183. The legs differ for stated reasons. The P/B leg prices all of book, including the cash pile, at the terminal ROE of 10.2% against a 14.5% cost of equity, so it is the lowest. The DDM gives credit for five years of high near-term dividends before the terminal; the sum of the parts charges the trapped-cash discount only on the retained share and values the float inside the franchise. We weight the sum of the parts most because its own-cash part has a direct book anchor.

Implied multiples of the base value: 4.0x FY2027F EPS, 0.70x June 2026E book, a 9.4% FY2027F dividend yield. Own cash is 64% of the sum of the parts: in the language of the F25 spec, Padma is a cash box with a fuel licence. Core P/E is 6.2x FY2027F core EPS of BDT 10.13 after stripping out own cash. Reverse check: the BDT 197.5 price matches our grid A with yields about 100bp below base (BDT 192), i.e. the market prices a faster fall in deposit rates.

Each scenario's sustainable ROE (9.4% bear, 10.9% bull) sits below Padma's own FY2021–FY2025 range of 14.0%–22.6%, for the reasons given in the forecast: the terminal yield of 7.2% is below anything Padma earned in FY2023–FY2025 and retained cash dilutes ROE. A fully stacked stress (bear drivers, yields 300bp lower, the stressed balances lost in full and a 25% loss on the Biman principal) gives BDT 91; we show it outside the range because it stacks shocks that are unlikely together.

Peer multiples are not used as a valuation leg: all three companies earn mostly interest, so a peer P/E would only restate the price. Peers' figures come from their own FY2025 annual reports on the same standalone basis.

Six risks move fair value; a 200bp fall in deposit yields is the most likely and costs BDT 56 a share

Every risk below moves a named line in the model; the fair value and FY2027F EPS after each shock (one at a time, base otherwise) come from recalculating the workbook [11]. Deposit yields are the most likely and largest recurring risk: the 2024–2026 rates were a peak. BPC reclaiming its float is the second; it has already fallen by a third in two years. A margin cut under fuel-price reform and a partial loss on the Biman receivable follow. The stressed banks matter less at Padma than at Jamuna. Volume matters least. The bear case moves the same drivers as this table: yields −200bp in FY2027–FY2028 fading to the same 7.2% terminal, the margin −Tk0.10 a litre, volume −1% for two years and a 50% haircut. A margin cut of Tk0.20 and yields 200bp lower in every year are larger single shocks than the bear and sit below it.

What would change our view. On the upside: a decision to pay out more of the cash to shareholders, of whom the state is the largest; recovery of contractual interest from Biman or Railway; completion of the land sale to BPC for BDT 1.77bn; or a new margin gazette. On the downside: Bangladesh Bank cutting rates faster than we assume (each 100bp is about BDT 29 a share), BPC tightening collection so the float shrinks, a change in jet-fuel pricing, or a provision on the stressed principal. We will revisit the range when the FY2026 annual report gives the June 2026 bank and receivable schedules.

Five signposts: the FY2026 results on 05-Nov-2026, the dividend, deposit rates, BPC payables and jet-fuel margins

• FY2026 audited results and Q1 FY2027 (board meeting 05-Nov-2026 [5]): our FY2026E EPS is BDT 58.38; watch the fourth-quarter operational loss and whether the auditor's qualifications are repeated.
• The FY2026 dividend: our model's 38% payout implies BDT 22.2; a repeat of the BDT 16 habit would mean a 27% payout and more cash trapped.
• Term-deposit and treasury yields: our base performing yield is 10.0% in FY2027F; each 100bp is worth about BDT 29 of fair value.
• Due to affiliated companies (BPC) in each balance sheet: BDT 57.1bn in June 2025 and 48.3bn in March 2026.
• Jet-fuel net earnings per tonne (Tk2,621 in 9M FY2026) and any EMRD gazette on marketing margins; Biman and Railway receipts.

Financials and data: six years of history and five forecast years

Note: this initiation uses the FY2025 audited accounts and the un-audited nine months to 31-Mar-2026. The FY2026 annual statements (year to 30-Jun-2026) have not yet been filed; the board meets on 05-Nov-2026 and the model will be updated when they are.

FAQ

How does Padma Oil make money?

It distributes BPC's fuel for a gazetted margin (Tk0.80 a litre on diesel) and earns interest on a large deposit book, much of it money owed to BPC. In FY2025, 82% of pre-WPPF profit was non-operating income.

Why did nine-month EPS rise in FY2026?

Interest on deposits rose 7.7% and jet-fuel margins doubled; nine-month EPS was BDT 44.02 against 40.20.

What is Padma's exposure to stressed banks?

BDT 1.93bn of FDRs at five merging banks at June 2025, per the auditor's qualified opinion. We deduct 30% in the base valuation (50% bear, 10% bull).

What is the Biman receivable?

An agreed stuck-up balance of BDT 21.1bn (principal 14.5bn plus 8% interest) under a 2019 agreement, of which BDT 4.5bn had been received by June 2025. The interest is not booked as income.

What is the fair value range?

BDT 194–249, base BDT 220.7, probability-weighted 221.2, at a 14.5% cost of equity.

Sources

1. Padma Oil PLC Annual Report 2024-25 (audited statements to 30-Jun-2025, directors' report, Annexure-3 five-year data, auditors' report) · link · accessed 2026-10-31
2. Padma Oil Company Limited Annual Report 2022-23 (statements to 30-Jun-2023) · link · accessed 2026-10-31
3. Padma Oil Company Limited Annual Report 2020-21 (statements to 30-Jun-2021 with FY2020 comparatives) · link · accessed 2026-10-31
4. Padma Oil PLC un-audited Q3 financial statements, nine months to 31-Mar-2026 · link · accessed 2026-10-31
5. DSE announcements for PADMAOIL, Nov-2024 to Oct-2026 (quarterly EPS, FY2024-FY2025 dividends, qualified opinions, name change, board meeting 05-Nov-2026) · link · accessed 2026-10-31
6. The Business Standard, government raises fuel marketing companies' margin (diesel/kerosene Tk0.80, octane/petrol Tk0.90 per litre), Mar-2024 · link · accessed 2026-10-31
7. Jamuna Oil PLC Annual Report 2024-25: volume and FY2025 results · link · accessed 2026-10-31
8. Meghna Petroleum PLC Annual Report 2024-25: volume and FY2025 results · link · accessed 2026-10-31
9. AnalystBro market data: DSE:PADMAOIL weekly bars and DSEX weekly bars (chart_bars), to 29-Oct-2026 · link · accessed 2026-10-31
10. Bangladesh Bank treasury auction cut-off yields (10-year BGTB 9.268%, 25-Oct-2026) and Scheduled Banks Statistics weighted-average deposit rate 6.21% · link · accessed 2026-10-31
11. AnalystBro PADMAOIL model (model.xlsx): forecasts, valuation, scenarios, sensitivities · link · accessed 2026-10-31