Press Release

VIS Assigns Initial Ratings to Comfort Knitwears (Pvt.) Limited

Karachi, June 2, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-2’ (Single A Minus/A-Two) to Comfort Knitwears (Pvt.) Limited (CKPL). The medium to long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamentals and liquidity factors. Outlook on the assigned ratings is ‘Stable’.

CKPL is a vertically integrated knitwear apparel facility comprising spinning, knitting, dyeing and stitching facilities. Shareholding is vested within the family who are actively involved in day-to-day operations. The ratings incorporate extensive experience of sponsors in the textile industry and diversified exposure in pharmaceutical and transportation businesses. The company also has qualified and experienced management team and adequate internal control systems. Around two-third of the revenue emanated from knitted garments which are largely exported while yarn constituting nearly one-third of the product mix, is primarily sold in the local market. The ratings are supported by sound growth in revenues in line with Covid-led growth in textile industry of the country. Liquidity profile is underpinned by adequate current ratio and manageable net operating cycle. Debt service coverage has also remained adequate on a timeline basis. As no major capex is intended, capitalization indicators are projected to strengthen on the back of equity expansion in line with profit retention.

Whilst there is high cyclicality and competitive intensity for spinning industry along with volatility in cotton prices, overall business risk profile of the textile industry is supported by relatively stable demand and favorable regulatory regime. Being in the value-added export segment of the textile industry, the company is relatively less exposed to volatility in the business risk given the favorable approach by the government to increase exports. However, ongoing economic uncertainties in the domestic and international markets may impact the growth in the textile segment. The ratings, therefore, will remain sensitive to achieving projected growth in revenues and profitability while improving liquidity and leverage indicators, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 306) or email at info@vis.com.pk


Faryal Ahmad Faheem
Deputy CEO


VIS Entity Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .