PACRA Upgrades Short Term Rating of Habib Construction Services Limited : AsiaNet-Pakistan

PACRA Upgrades Short Term Rating of Habib Construction Services Limited

April 22, 2019 | General Business News | Share:

Lahore, April 22, 2019 (PPI-OT): Habib Construction is in the process of securing new projects which are worth PKR 7bln. Further, 43km BOT project of toll way worth PKR 5.7bln will be executed through subsidiary company – ensuring sustainable revenue stream for 25 years. This will ease off the pressure company suffered in previous year because of the economic conditions and slowdown in projects related activity. The company suffered a financial set-back on one of the mega project in previous year – incurring significant loss. However, the company is in arbitration on this project concerning (i) de-notification of already approved rates on Non BOQ items; and (ii) delays arising from stay orders.

Court has directed for the appointment of arbitrator and the likely positive settlement of this would support Habib Construction’s financial profile. Release of funds from Bahria Town has strengthened the liquidity of the company. Habib Construction Services has delivered a number of infrastructure projects in the last couple of years and has built its repute as a “Fast Track” execution company. The majority shareholder is Mr. Shahid Saleem, while other executives and management members have remaining stake – furnishing fuel to the company’s growth. Habib Construction Services has a number of banking lines, predominantly non-funded, required for its construction business.

The ratings are dependent on sustaining a steady revenue stream and financial risk profile. Any prolonged downturn in subdued business volume can negatively affect the ratings. Good corporate governance practice is considered essential. Adherence to debt related covenants and overall coverage matrix is essential to ratings.

For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com

Tags:

Category: General Business News