VIS Reaffirms Ratings for Hi-Tech Lubricants Limited with Stable Outlook

Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Hi-Tech Lubricants Limited at ‘A-/A2’, indicating good credit quality and sound short-term liquidity. The outlook on these ratings remains stable, demonstrating confidence in the company’s ability to manage potential economic fluctuations.

According to VIS Credit Rating Company Limited, Hi-Tech Lubricants Limited operates primarily in Pakistan’s lubricant sector through products sourced from SK Enmove Co., Ltd., a South Korean supplier. The company, known for distributing ZIC-branded lubricants, has diversified its operations to include blending, polymer production, and vehicle maintenance services. Since entering the petroleum sector in 2020, HTL has expanded its network to 55 fuel stations, significantly boosting its revenue from oil marketing operations.

The reaffirmation reflects the company’s business and financial risk profiles. The oil marketing sector’s high-risk nature, due to regulated pricing and market competition, contrasts with the medium risk in lubricants, where stable demand is offset by economic vulnerabilities. Financially, HTL has faced challenges with declining gross profit margins due to lower-margin oil marketing products and increased costs. However, a partial recovery has been noted with local blending initiatives and higher dividend income supporting net margins.

The company’s future ratings will depend on sustaining improvements in gross margins and operational efficiencies, as well as maintaining a stable liquidity profile and improved coverage metrics.

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