Karachi: In a recent development, Ideas (Private) Limited, the retail arm of the Gul Ahmed Group and a wholly owned subsidiary of Gul Ahmed Textile Mills Limited, has received preliminary ratings from the Pakistan Credit Rating Agency Limited (PACRA) for its upcoming Short-Term Sukuk offering. The company plans to issue an unsecured, unlisted Sukuk valued at up to PKR 1.0 billion with a tenor of up to six months to finance its working capital requirements.

According to PACRA, the ratings reflect Ideas' strategic position within the Gul Ahmed Group and its extensive retail network of 92 outlets nationwide. The company sells a range of products, including home textiles, fabric, apparel, footwear, and accessories under the 'Ideas by Gul Ahmed' brand. In the fiscal year 2026, Ideas reported a 15.9% year-over-year increase in topline revenue, reaching PKR 30,957 million. Despite a moderation in gross and operating margins, the net margin improved to 1.9% due to lower finance costs and an effective tax rate.

The company's EBITDA rose by 26.8% to PKR 4,259 million, enhancing its EBITDA coverage of finance costs to 3.0x. Total borrowings decreased by 15.3% to PKR 6,251 million, resulting in a gearing ratio reduction to 51.5%. Inventory days also showed improvement, and operating cash flows turned positive at PKR 3,262 million.

During the first quarter of the fiscal year 2027, Ideas achieved net sales of PKR 7,224 million, with further declines in borrowings to PKR 5,511 million, improving the gearing ratio to 48.0%. The company continues to maintain adequate liquidity with substantial headroom under short-term borrowing limits.

The upcoming Sukuk, however, carries no guarantee or credit enhancement, making repayment dependent on the company's cash flows, which are supported by a FY26 free cash flow from operations of PKR 3,844 million and unutilized short-term limits. PACRA emphasizes the importance of sustaining revenue growth, strengthening profitability, and managing inventory and working capital efficiently to maintain the ratings. Additionally, continued support from the parent company and strengthening governance frameworks are deemed critical for future performance.