Lahore, October 25, 2021 (PPI-OT):Ghandhara Nissan Limited (GNL) ratings reflect reputable business profile and presence in the trucks segment of the automobile sector. The product portfolio of the company is dominated by Chinese brands (including HDTs, LDTs, and LCVs) together with French truck. Ghandhara Nissan has solidified its position in the market through assembling and progressive manufacturing of JAC Trucks, import and sale of Dongfeng and Renault Trucks in complete built-up units, and assembly of other vehicles under contract agreement with Ghandhara Industries Limited and GDFPL. During FY21, automobile sales and production accelerated as the scars of COVID-19 pandemic started to reverse.
Production and sale of trucks grew by ~29% and ~20%, respectively. The sector’s margins improved significantly as compared to preceding year which was majorly impacted by Global Pandemic Crises. However, bottom-line of the sector remains under pressure. It is further gauged that recent currency devaluation which would lead to increase in cost of imported parts could create pressure on the sector’s margins. Top-line growth of the company captures the overall performance of the industry and posted a healthy recovery in earnings for the period under review.
Financial risk profile of the company is considered strong as both the cash flows and debt coverage metrics witnessed an improvement driven by volumetric growth and margins. The amount of leverage in the company’s capital structure moderately stands at lower levels. GNL holds competitive market position, high brand value, and solid sponsorship support. Majority ownership of the company is held by Bibojee Group of Companies. Their business acumen is further enriched by the group’s stake in the country’s leading tyre manufacturing company. Furthermore, the company has entered into formal arrangements with M/S. Chery International Corporation – Wuhu, China for manufacturing and distributing of Chery passenger cars (SUVs/Crossovers) in Pakistan.
The ratings are dependent on upholding of the company’s business as well as financial risk profile. Improvement in margins and intact coverages are imperative. Key element is company’s stance on working capital management and leveraged capital structure. Moreover, management’s ability to sustain its market share while benefiting from positive demand fundamentals is crucial.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com