Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has assigned initial ratings to Mughal Iron and Steel Industries Limited, recognizing its resilience in the face of significant challenges facing Pakistan's steel sector. The company, a key player in the industry, continues to navigate subdued domestic demand and rising operational costs, including increased power tariffs.

Mughal Iron and Steel has managed to withstand these pressures through strategic strengths, including a diversified product portfolio and a robust nationwide distribution network. The company produces girders, T-iron, and rebars, and has a unique revenue stream from exporting copper ingots and granules, which has partially insulated it from sectoral challenges such as restrictions on letters of credit.

This export focus, primarily to China, contributed approximately 19% to Mughal's total revenue during the first nine months of the fiscal year 2025, helping the company maintain a strong topline performance. Despite a slight decline in gross margins due to ongoing sector pressures, and net margins constrained by high finance costs, the company's financial position showed improvement with a reduced leverage ratio.

Looking forward, Mughal's management is concentrating on expanding volumes and protecting margins. The company is investing in cost-efficient and alternative energy solutions to reduce power costs, which is anticipated to have a positive impact on profitability. Additionally, a potential reduction in the policy rate may lead to lower finance costs.

Revenue for the period stood at PKR 66.168 billion, slightly down from PKR 67.134 billion in the previous year, reflecting broader industry challenges. However, Mughal's strategic initiatives and financial management have positioned it to maintain a healthy business profile amid economic slowdown and inflationary pressures.

PACRA's ratings are contingent on Mughal's ability to effectively manage financial risk indicators and adhere to governance frameworks, which are considered critical for sustaining its business resilience in the current macroeconomic environment.