Citi Pharma Limited’s Short-Term Sukuk Receives ‘A1’ Rating

Karachi: VIS Credit Rating Company Limited has finalized a short-term rating of ‘A1’ for the Short-Term Sukuk (STS) issuance of Rs. 1,500 million by Citi Pharma Limited. The rating suggests a strong likelihood of timely repayment of short-term obligations and excellent liquidity factors. Additionally, Citi Pharma Limited maintains an entity rating of ‘A/A1’ with a ‘Stable’ outlook. The previous rating action was announced on December 16, 2024.

According to a statement by VIS Credit Rating Company Limited, Citi Pharma Limited issued a rated, unsecured, privately placed, short-term Musharakah-based sukuk on January 23, 2025, to address its working capital requirements. This Sukuk, which includes a green shoe option of PKR 500 million, has a tenor of six months. The profit, calculated at 6M KIBOR plus 80 basis points per annum, will be payable upon maturity, with the principal amount set for redemption on July 23, 2025.

The rating takes into account the low business risk associated with the Active Pharmaceutical Ingredient (API) industry, characterized by high demand and supportive government policies promoting local production. High entry barriers, such as stringent regulations and substantial research investments, help moderate competition within the sector.

Citi Pharma Limited has demonstrated strong revenue growth despite relatively low margins in its API segment, necessitating elevated working capital investments. The company’s strategic partnerships with global firms aim to enhance production efficiency and support potential international expansion. Diversification into high-margin formulations and nutraceutical exports are part of the company’s broader growth strategy.

Efforts to mitigate client and product concentration risks through portfolio diversification are underway. The company maintains a strong liquidity and profitability profile, focusing on sustaining growth and meeting the pharmaceutical industry’s demands. Ensuring sufficient short-term credit lines to support liquidity needs will be crucial for maintaining the rating.

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