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PACRA Maintains Entity Ratings of Unicol Limited

Lahore, March 18, 2023 (PPI-OT): Pakistan’s ethanol industry is largely export based owing to meager domestic consumption. The Country’s ethanol exports witnessed ~10% during MY22 from 353,937MT during MY21 due to higher molasses production and better recovery. Prices in the global market have been high, on the back of spike in ethanol demand, despite unsteady economic conditions worldwide. Impact of high international ethanol prices was supplemented by devaluation of the Pakistani Rupee. Sugarcane production in Pakistan during MY22 improved, as domestic distilleries posted stable profits. Going forward, the ethanol industry’s margins are expected to remain stable owing to increased ethanol prices, though raw material cost has also increased in the current sugar crushing season (MY23).

The ratings reflect Unicol Limited’s strong business profile emanating from strong and stable margins, and the export-oriented nature of the ethanol industry. Additionally, the ratings draw strength from the Company’s association with three strong business Groups: Ghulam Faruque Group, Amin Bawany Group, and Hasham Group. Robust clientele provides and edge in the export market. Unicol has been able to enhance its efficiency through consistently investing in BMR.

This has yielded positive results while augmenting the turnover, posting a growth of 6.4% during MY22. This, along with substantial increase in the profitability braces the Company’s overall financial performance. The Company has an adequately leveraged capital structure supplemented by strong coverages and healthy working capital cycle. This kept the financial risk moderate. Strong governance framework and management practices bodes well for the Company’s ratings.

The ratings are dependent on the Company’s ability to sustain its margins and healthy coverages while maintaining the necessary cushion and discipline in working capital management. Amicably sustaining the relationship among shareholders remains crucial for the ratings. Significant deterioration in coverages will have a negative impact on ratings.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

The post PACRA Maintains Entity Ratings of Unicol Limited appeared first on Business News Pakistan.

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