Press Release

VIS Assigns Initial Ratings to Pak Kuwait Textiles Limited

Karachi, Oct 20, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A-1’ (Single A Minus/A-One) to Pak Kuwait Textiles Limited (PKTL). 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-1’ denotes high certainty of timely payment, with excellent liquidity factors and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’.

PKTL is primarily involved in manufacturing cotton and blended yarn for export-oriented textile units. The shareholding is vested with the family members while the ratings incorporate extensive experience of the sponsors in the textile industry spanning over more than four decades. The company’s topline exhibited sizeable growth during the last two years emanating from volumetric increase in sales due to the impact of merger with the subsidiary company along with increase in average yarn rates driven by covid led growth in textile industry of Pakistan. Profit margins remained robust on account of favorable product prices, economies of scale and rationalized expenses. Liquidity profile is considered strong in terms of cash flow coverages and working capital management. The company has low leveraged capital structure indicating strong risk absorption capacity. Meanwhile, the ratings factor in high cyclicality and competitive intensity of the spinning industry along with volatility in cotton prices. Additionally, in the aftermath of recent floods leading to cotton shortage, weakening demand of non-essential items in the local and international markets amid looming recession, may negatively impact the outlook of textile industry. Ratings will remain dependent on achieving projected sales and profitability while maintaining liquidity and capitalization profiles, going forward.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8005) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at info@vis.com.pk


Sara Ahmed
Director

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 .