Press Release

VIS Upgrades Entity Ratings of Akhtar Textile Industries (Private) Limited

Karachi, Jun 21, 2021: VIS Credit Rating Company Limited (VIS) has upgraded the entity ratings of Akhtar Textile Industries (Private) Limited (ATIL) from ‘A-/A-2’ (Single A Minus/A-Two) to ‘A/A-2’ (Single A/ A-Two). The long-term rating of ‘A’ signifies good credit quality and adequate protection factors. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-2’ depicts good certainty of timely payment. Liquidity factors and company fundamentals are sound with good access to capital markets. Outlook on the assigned ratings has been revised from ‘Rating Watch - Negative’ to ‘Stable’. Previous rating action was announced on April 24, 2020.

The assigned ratings incorporates business risk profile of the denim sector, wherein gross margins of sector participants are exposed to volatility in cotton yarn prices. During FY20, the industry has undergone a slowdown, as global consumer spending on garments was affected by pandemic-induced lockdowns globally. However, despite the slowdown experienced by peers, ATIL managed to post contrary trend, wherein topline grew by 9%, although lagging the previous 2-year average growth. In the ongoing year, management projects moderate growth for FY21. Gross margins of the company broadly remained intact with marginal volatility, reflecting the Company’s ability pass on cost pressures to customers.

The improvement in assigned rating takes into account the consistent growth in topline and sticky margins, as a result of which FFO has posted consistent improvement. Overall cash flow coverage of debt translates in improved debt repayment capacity. Current ratio of the company stood at all-time high at 1.2x as at Dec’20, which is aligned with the short term rating assigned to ATIL. With capacity expansion on the anvil, growth in topline is expected to increase, which has been incorporated into the assigned rating. The assigned rating remains dependent on achievement of growth in topline, as envisaged, and maintenance of business & financial risk metrics in line with the threshold for the rating.
For further information on this rating announcement, please contact Mr. Arsal Ayub, CFA (Ext: 216) or the undersigned (Ext. 306) at 021-35311861-70 or email at

Faryal Ahmad Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates - April 2019

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