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Karachi, August 18, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of DWP Technologies (Pvt.) Ltd. (DWPTL) at ‘A-/A-2’ (Single A Minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ indicates good certainty of timely payment. Liquidity factors and company fundamentals are considered sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings is ‘Stable’. The previous rating was announced on July 19, 2022.
The assigned ratings draw comfort from the Company’s position as of the leading players in the industry, sufficient sector expertise along with its sponsorship backing being a part of the DWP Group that has presence in consumer electronics and technology industries. Overall business risk is assessed to be moderate given the Company’s long-standing relationships with globally-renowned IT firms which provides a competitive edge in terms of both quality and cost, helping secure long-term contracts and recurring business from clients. Furthermore, demand mainly emanates from large established firms across the banking, telecom, defense, and public sectors with low associated credit risk. Contract terms for projects are USD-denominated for private firms and PKR-denominated for governmental clients, which are adjustable for higher costs, somewhat providing a hedge against exchange rate fluctuation. Moreover, minimal hindrances related to the import of necessary IT supplies in the ongoing year due to support from governmental clients has been noted.
The assessment of DWPTL’s financial risk profile takes into consideration decrease in the topline during 9MFY23 owing to slowdown in demand given the current adverse macroeconomic conditions in the country. Gross margins, witnessed an uptick as proportion of USD-denominated projects increased, however, net margins are constrained by greater financing charges and the high tax environment of the services sector. Lower bottom-line in absolute terms stressed the debt-servicing capacity of the Company to less than 1.00x in 9MFY23. Ratings draw comfort from low leverage levels as lower business activity in the ongoing year decreased working capital requirements. Long-term financing remained comparatively low and pertained to procurement of assets for ongoing projects. The assigned ratings remain strongly underpinned by the Company’s ability to improve its debt-servicing coverage through greater internal cash flow generation over the rating horizon.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/
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