PACRA Assigns Strong Ratings to A. Rahim Foods Reflecting Robust Market Position

Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has assigned initial entity ratings to A. Rahim Foods (Pvt.) Limited, positioning the company as a stable and influential player in the food processing industry. The agency has given A. Rahim Foods a long-term rating of A- and a short-term rating of A2, with an outlook marked as stable.

The ratings underscore the company’s dominant market position bolstered by its flagship “Dawn” brand and a network of sister companies, including Dawn Frozen Foods, ATA Bakery Solutions, and AB Mauri Pakistan. These entities enhance A. Rahim Foods’ presence in the market, focusing on yeast and bakery ingredients.

A. Rahim Foods benefits from the extensive industry experience of its sponsors and a highly qualified management team. Although the company has yet to establish formal board committees, there is potential for governance enhancements. The company’s product portfolio caters to consumers across over 150 cities in Pakistan, offering a wide range of stock-keeping units (SKUs).

The company has demonstrated consistent revenue growth, with a recent expansion featuring a state-of-the-art automated plant in Muridke, enhancing production capabilities and market share. The company’s revenue generation spans seven product segments, with bread and burgers contributing significantly to total revenue.

For FY24, A. Rahim Foods reported a total revenue of PKR 12 billion, marking a 42% increase from the previous year. However, rising raw material costs due to inflation led to an 8.6% decline in gross profit margin. Despite these challenges, the net profit margin remained stable at around 2.3%, with improvements noted in the ongoing financial year.

A. Rahim Foods maintains a sound financial risk profile, characterized by stable leverage indicators and low debt levels. The company’s strategic approach to market dynamics and commitment to global product quality standards support its credit ratings.

The sustainability of these ratings hinges on the management’s ability to maintain margins and ensure financial discipline. Effective working capital management and adequate cash flow will be crucial for the company’s continued success and ratings stability.