AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi: VIS Credit Rating Company Limited (VIS) has announced an upgrade in the entity ratings of Interloop Limited (ILP), moving from A+/A-1′ (Single A Plus/A-One) to AA-/A-1 (Double A minus/A-one), according to a press release dated July 18, 2024. This revision reflects ILP’s enhanced credit quality, with the new long-term rating indicating a strong protection factor and a modest risk which might fluctuate with economic conditions. The short-term rating upgrade points to ILP’s excellent liquidity and the strong likelihood of timely financial obligations fulfillment.
The recent rating upgrade comes after a previous adjustment on May 10, 2023, marking a continued positive trajectory for ILP in the competitive textile sector. As a prominent player on the Pakistan Stock Exchange, ILP boasts a comprehensive vertical integration and a diversified product range, including Hosiery, Denim, Knitted Apparel, and Seamless Activewear. The company caters to major global brands and retailers, maintaining a significant market presence in the Netherlands, China, Japan, the USA, and Sri Lanka with a workforce exceeding 35,000.
According to information available from the Pakistan Stock Exchange (PSX), the assigned ratings consider the textile sector’s medium business risk, characterized by its sensitivity to economic cycles and high competition. Factors such as global economic shifts, geopolitical issues, and delays in sales tax refunds further impact the sector. Moreover, reliance on both local cotton production and imported raw materials introduces substantial exchange rate risks.
Financially, ILP has shown remarkable performance by crossing the Rs. 100 billion sales mark in FY23, recording a total of Rs. 119.2 billion, which represents a 31% growth from the previous fiscal year. Both gross profit and net profit margins have improved, reflecting strong operational efficiencies. Additionally, the company’s strategic moves to expand its capacity in the apparel segment and diversify its revenue streams have been significant contributors to its growth.
The upgrade also takes into account ILP’s sound financial health, marked by an increase in equity to Rs. 43.8 billion and a rise in total debt to Rs. 59.6 billion. Despite higher borrowings, the company has managed to slightly improve its gearing and leverage ratios. The Debt Service Coverage Ratio (DSCR) remained robust at over 4.5x in FY23, showcasing a stable liquidity profile.
With these achievements, ILP has secured its position as Pakistan’s top exporter for FY24, demonstrating its pivotal role in the national economy and the global textile industry.