Press Release

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

Karachi, April 14, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Akhtar Textile Industries (Private) Limited (ATIL) at ‘A/A-2’ (Single A/A-Two). Medium to long-term rating of ‘A’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on May 09, 2022.

Ratings reaffirmation factors in the strong sponsor group, 38-year track record of exporting denim products, consistent growth in production levels and export volumes, strong uptick in revenues with improved margins and cash flows over the review period. In addition, low debt levels with timeline growth in equity base has led to improvement in leverage metrics. Ratings also reflect the favorable business model, with strong export sales and minimal reliance on imports. Business risk profile takes into account industry wide growth in exports over the last year; however, recent floods across the country, high interest rate situation, inflationary pressures, higher electricity costs and demand slow down pose risks on the sector over the medium term. Ratings are constrained by current weak macroeconomic environment globally and locally.

Sales revenue exhibited a healthy double-digit growth for the second year in a row, driven by higher prices in dollar terms, volume uptick, and rupee devaluation. Sales volume remains strong in the current fiscal year despite the global slowdown. Product wise, denim pants make up ~82% of sales on average, with the rest attributed to denim shorts. Client concentration risk is high as Levis is the major customer while majority sales are directed towards US, followed by Mexico, Canada, Germany, Australia and others. Moreover, significant improvement in profitability margins was a result of shift towards higher-margin products and consistent staffing to drive efficiency. Going forward, maintenance of margins and leverage indicators will remain important for ratings.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 206) or the undersigned (Ext: 207) at (021) 35311861-4 or email at info@vis.com.pk






Sara Ahmed
Director

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

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