AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Karachi, August 18, 2023 (PPI-OT): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Premium Textile Mills Limited (PRET) at ‘A-/A-2’ (A Minus/A-Two). Outlook on the assigned ratings is ‘Stable’. The long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. The previous rating action was announced on July 18, 2022.
Premium Textile Mills Limited (PRET) was incorporated as a Public Limited Company in 1989. The Company is part of the Premium Group of Companies which is involved in trading (Prudential Enterprises), auto parts (Techno Fabrik) and textile (PRET and Premium Knits) sectors. PRET is engaged in the manufacturing and sale of yarn to both local and export market. The manufacturing facility of the Company is located in Nooriabad.
Ratings take into account the high cyclicality and competitiveness in the spinning sector along with a weakening in demand locally and internationally resulting into higher business risk profile. Going forward, management expects revenue base to increase due to gradual ease in LC constraints and pickup in demand of the product.
Assessment of financial risk profile incorporates double-digit revenue growth and strengthening of capitalization profile in the review period due to higher selling prices and non-recurring income in FY22. However, albeit remaining in line rating benchmarks, weakening in margins and liquidity coverages was noted during the review period due to currency devaluation and inflationary pressures. Management projects stable revenue growth over the rating horizon supported by gradual improvement in international demand dynamics and enhanced exports emanating from the socks division. Further, gradual ease in LC constraints will also contribute positively to the expected upward trend in the top line going forward.
Improving profit margins amidst challenging operating environment will be important from a ratings perspective. With profit retention largely contributed by non-recurring other income, capitalization indicators of the Company improved in the review period. Despite no plans for further expansion, incremental debt for ongoing expansion in spinning unit is expected to impact capitalization profile. Ratings remain underpinned on the projected financial risk indicators provided by the management.
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/
The post VIS Reaffirms Entity Ratings of Premium Textile Mills Limited appeared first on Pakistan Business News.