Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Lucky Renewables (Private) Limited at 'A/A2', indicating a good credit quality with adequate protection factors. The outlook for the ratings remains stable, reflecting confidence in the company's ability to meet its financial obligations. The previous rating action was announced on December 20, 2023.

According to VIS Credit Rating Company Limited, Lucky Renewables, established to develop a 50 MW Wind Power Project in District Thatta, commenced operations in September 2021. The company, a subsidiary of Lucky Textile Mills Limited, is part of the Yunus Brothers Group, with business interests spanning various sectors. Lucky Renewables operates under a 25-year Energy Purchase Agreement with the Central Power Purchasing Agency, ensuring revenue predictability.

The reaffirmed ratings consider the renewable energy sector's medium-to-low risk profile and the company's financial improvements. A tariff adjustment approved by the National Electric Power Regulatory Authority in FY24 led to higher gross margins and improved coverage ratios. Although liquidity constraints have been a concern, recent operational cash flows have addressed these issues. The government-backed guarantee on receivables further mitigates associated risks. Future ratings will depend on sustained financial improvements, particularly in liquidity and coverage profiles.