DIC Pakistan’s Ratings Maintained by PACRA Amid Financial Growth and Increased Leverage

Karachi: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of DIC Pakistan Limited, reflecting the company’s strong market position and financial stability. The ratings, which remain AA- for long-term and A1 for short-term with a stable outlook, underscore DIC’s robust sponsorship profile and experienced management team.

According to The Pakistan Credit Rating Agency Limited, DIC has sustained its growth trajectory despite an economic slowdown during 2023, evidenced by a 14% increase in topline revenue. The company’s revenue reached PKR 10.6 billion in 2022, bolstered by higher prices for printing ink. As of the first nine months of 2024, revenue had risen to PKR 8.78 billion, with rotogravure ink contributing significantly to earnings. Profit after tax increased by 59% in 2023, driven by effective cost management strategies.

The company’s production utilization levels declined due to reduced demand, yet DIC managed to maintain a 39% share of the total market demand for printing ink. In addition, the company’s leverage rose to 65.4% as of the first nine months of 2024, primarily due to a PKR 1.3 billion long-term loan. The company’s financial strategy includes maintaining a moderately leveraged capital structure, which remains crucial for its ratings.

DIC’s commitment to innovation is marked by the introduction of UV Wood Coatings to its product portfolio. The company continues to benefit from group synergy with DIC Corporation and Packages Limited, aiding in effective inventory management and meeting high demand.

The ratings are contingent on the management’s ability to sustain market share, improve margins, and manage working capital prudently. Any significant decline in margins or coverage could impact the ratings. The parent company’s commitment to supporting DIC financially remains vital to the company’s future ratings stability.

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