Bank of America Securities Analyst Keeps Sasol (SASOF) on Hold with $120 Price Target

Bank of America Securities analyst Sashank Lanka reiterated a Hold rating on Sasol, setting a price target of R$120.00. The analyst consensus on Sasol is a Hold with an average price target of $6.79. SASOF has a market cap of $4.25B and a P/E ratio of 10.40.

Sasol Ltd., a South African energy and chemicals firm, has been gaining attention for its strategic shift towards sustainability and profitability. The company's recent earnings report and carbon credit purchases have sparked interest among investors, regulators, and climate observers.

Earnings Power: Fueling a Dual Strategy

In its latest earnings report, Sasol posted a year-on-year improvement, supported by stable product prices and efficiency gains. The company's operating profit rose due to stronger chemical sales, offsetting higher costs in its coal division. This financial resilience has enabled Sasol to invest in both fossil fuels and low-carbon projects. For the fiscal year ending June 30, the company earned 10.60 rand per share, a significant turnaround from a loss of 69.94 rand per share the previous year [1].

Rising Carbon Credit Purchases: Flexibility or Delay?

One of the key headlines is Sasol's decision to boost its purchase of carbon credits. In the fiscal year ending June 2025, Sasol’s carbon credit purchases increased to R723 million, a 25% increase year-on-year. This amount was nearly triple the value of the credits it bought in 2023. Since 2019, Sasol has acquired more than 11 million South African carbon credits, reducing its carbon tax liability by more than R650 million. Most of these credits come from international renewable energy and reforestation projects [1].

Coal’s Grip: South Africa’s Energy Dilemma

Sasol is one of South Africa’s top coal users, relying on coal for power and to make synthetic fuels and chemicals. Its Secunda plant is one of the single largest point sources of carbon dioxide globally, emitting more than 56 million tons of CO₂ equivalent each year. The company believes coal is essential for South Africa’s energy and industry due to electricity shortages and dependence on Eskom, the state utility [1].

Counting Carbon: Sasol’s Net-Zero Targets and Progress

Despite its coal footprint, Sasol has stepped up efforts to diversify its energy mix. The company is investing in renewable energy projects, including solar and wind farms, and partnering with independent power producers to shift portions of its energy use away from coal. Sasol aims to cut its Scope 1 and 2 emissions by 30% by 2030 and achieve net-zero emissions by 2050. Current emissions are down about 13% from the baseline [1].

Markets in Motion: Offsets, Renewables, and Risks

Sasol's strategy reflects broader challenges facing energy and industrial companies worldwide. Carbon credits are gaining popularity, with the voluntary carbon market expected to grow to nearly $50 billion by 2030. However, the credibility of offsets is under scrutiny, and investors are demanding more transparency. Meanwhile, renewable energy costs continue to fall, making decarbonization complex [1].

Analyst Views: Hold Rating and Price Targets

Bank of America Securities analyst Sashank Lanka reiterated a Hold rating on Sasol, setting a price target of R$120.00. The analyst consensus on Sasol is a Hold with an average price target of $6.79. SASOF has a market cap of $4.25B and a P/E ratio of 10.40 [2].

Conclusion

Sasol's higher earnings and strategic investment in carbon credits reflect its commitment to balancing financial performance with sustainability goals. The company's ability to navigate the complexities of decarbonization in a coal-heavy market will be crucial for its long-term success. Investors should closely monitor Sasol's progress in scaling renewable energy, developing low-carbon technologies, and managing the risks tied to its coal reliance.

References

[1] https://carboncredits.com/sasols-ssl-stock-rises-on-profits-carbon-credit-surge-and-net-zero-push/
[2] https://www.gurufocus.com/news/3076414/sasol-ssl-boosts-carbon-credits-amid-production-expansion