AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Lahore, July 17, 2023 (PPI-OT): The ratings of Diamond Fabrics Limited reflect the company’s strong business profile emanating from its presence in the broader value chain in the international market; enabling the company to fare better against volatility. The company’s ownership rests with the Sapphire Group. The company is vertically integrated with four divisions (i) Spinning, (ii) Weaving iii) Denim, and iv) Apparel. Over the last two years, the company’s revenue base recorded a healthy increase. During FY22, the company’s top line witnessed a sizeable improvement to stand at PKR 24.1bln (FY21: PKR 19.2bln) where the sales mix remained skewed towards the export market. Net profitability recorded growth whilst the margins and coverages remained good. Management of receivables is essential. The customer concentration has remained high during FY22.
The financial matrix reveals largely the same leveraging despite an increase in short-term borrowings. The enhanced equity base bodes well for the enhanced risk absorption capacity. During 9MFY23, the company’s revenue base further increased to PKR 24.7bln (9MFY22: PKR 17.9bln). The margins and coverages remained in a comfortable range. The total borrowings remain largely the same. During 9MFY23, the textile exports were valued at $12.47bln compared to $14.24bln, reflecting a 12% decline YoY – the declining trend has been recorded in the last two quarters. The Country’s textile exports for the month of March clocked in at US$1.26bln, up 7% MoM. The decline in the previous overall exports is driven by attrition in the demand pattern of export avenues.
The hike in cotton prices and low demand in international markets is also a challenge. During the month of March, value-added textile exports increased by 6% MoM to US$863mln mainly due to Readymade Garments and Knitwear increasing by 8% and 12% MoM respectively while towels decreased by 6% MoM. Basic textiles witnessed an increase of 8% MoM to US$230mln in Mar-23. In volume terms, Knitwear, Readymade Garments, Bedwear, and Towels increased by 18%, 13%, 5%, and 2% MoM respectively. The demand pattern is expected to improve in the upcoming quarters.
The ratings are dependent on sustaining the business profile of the company by maintaining profitability and margins achieved from core textile operations. The sustainability of non-core income and prudent management of surplus funds will be ratings critical.
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 the Entity Ratings of Diamond Fabrics Limited appeared first on Pakistan Business News.