PACRA Assigns Initial Credit Ratings to Service Retail (Pvt.) Ltd.

LAHORE: Service Retail (Private) Limited, a subsidiary of Service Industries Limited, has received its first credit ratings from the Pakistan Credit Rating Agency Limited (PACRA), highlighting the company’s significant presence and influence in Pakistan’s footwear sector. The ratings reflect the company’s strong brand equity and its expansive network of Servis Shoe outlets across the country.

SRPL, known for its wide selection of footwear products for men, women, and children, as well as accessories and apparel, continues to uphold the Servis Group’s commitment to offering valuable products to local customers. The company’s distribution network is extensive, allowing it to maintain a firm position within the organized segment of Pakistan’s footwear market.

The footwear industry in Pakistan is mostly fragmented, with a large portion—approximately 80%—dominated by unorganized craft manufacturers and cobblers. The remaining 20% consists of organized, established brands like Servis, Stylo, Bata, Ndure, and Borjan. According to the Trade Development Authority of Pakistan, the annual demand for footwear is about 600 million pairs. Organized brands hold a significant share of the branded retail segment, while the cottage industry continues to meet domestic needs.

The industry is subject to cyclical demands, influenced by consumer spending and changing fashion trends, necessitating ongoing product innovation. During the first half of the calendar year 2025, SRPL reported a year-on-year revenue growth of approximately 12.1%, amounting to PKR 7.18 billion compared to PKR 6.37 billion in the same period of the previous year. This growth was supported by steady consumer demand and a strategic expansion of its retail footprint.

As of mid-2025, SRPL operated 280 outlets, primarily in Punjab, which provided access to a broad customer base. The company’s profitability margins have remained stable, supported by effective working capital management and a sound financial risk profile. The capital structure of SRPL is leveraged, with short-term borrowings mainly used for working capital needs.

PACRA’s ratings also take into account the company’s robust governance practices, experienced leadership, and a strong internal control framework. To maintain its ratings, SRPL will need to further strengthen its market position and continue its growth trajectory in a competitive environment, while maintaining prudent capital management and a conservative leverage approach.