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Karachi, VIS Credit Rating Company Ltd. (VIS) has revised the rating outlook of International Steels Limited (ISL) from ‘Rating Watch – Developing’ to ‘Stable’. The entity ratings have been maintained at ‘A+/A-1’ (Single A Plus/A-One), indicating good credit quality and high certainty of timely payment.
According to VIS Credit Rating Company Ltd, ISL, incorporated in 2007, is one of Pakistan’s major producers of flat steel products, with an annual capacity of 1,000,000MT. The ratings reflect the company’s stable financial performance amidst economic challenges in fiscal year 2023. ISL demonstrated financial resilience with sustained profit margins, aided by declining international steel prices and strategic reductions in borrowings to mitigate the impact of rising interest rates.
Despite improvements in margins, the bottom line was lower due to a decline in off-takes and reduced revenue. The ratings also consider ISL’s healthier capitalization profile following a reduction in debt utilization, driven by a strategy of limiting inventory build-up. ISL’s liquidity profile remains sound, with healthy overall benchmarks and a Debt Servicing Coverage Ratio (DSCR) of 2.6x in FY23.
VIS noted that future ratings would be sensitive to improvements in topline and profitability, as well as the maintenance of capitalization, liquidity, and coverage metrics. The continuation of inventory management practices adopted in FY23 is also deemed crucial.
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