Press Release

VIS Maintains Entity Ratings of Crescent Bahuman Limited

Karachi, June 11, 2021: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Crescent Bahuman Limited (CBL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings has been revised from ‘Rating Watch-Developing’ status to ‘Stable’. The previous rating action was announced on April 22, 2020.

The ratings assigned to CBL take into account moderate risk profile of the company underpinned by its presence in the export oriented value-added textile segment, fully integrated denim jeans production unit giving complete control on quality maintenance, geographical diversification and continued investment in supply chain automation and research & development coupled with efficiency enhancements through capex in waste management and solar energy systems. Ratings reflect the company’s established market position as one of the leading exporters’ of denim products along with long-standing business relationships with leading international brands. Ratings also incorporate sound financial risk manifested by rescued margins, positive momentum in profitability, manageable gearing indicators and comfortable debt service coverages. Further, owing to reduction in benchmark rates, the financing cost for the company has reduced, reflecting positively on the bottom line.

Given improvement in the company’s operational performance owing to pandemic led boom in textile sector during the period under review, the outlook assigned to CBL’s ratings has been revised to ‘Stable’. Even though concerns of a successive waves of Covid-19 are present, strong order book of the industry in the ongoing year along with vaccine rollout has largely subsided business risk concerns. With plan of equity injection, leverage indicators are projected to improve further during the rating horizon. The ratings are dependent on maintenance of margins, realization of projected targets, sustenance of long-term customer relations and incremental cash flow generation from recent capital expenditure coupled with evolution of sector dynamics post ongoing pandemic.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 or email at info@vis.com.pk .




Faryal Ahmed Faheem
Deputy CEO

Applicable rating criterion: Corporates (May 2019)
https://www.vis.com.pk/kc-meth.aspx

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