Lahore, June 25, 2021 (PPI-OT):Nishat Group, through Nishat Hotels and Properties Limited (‘NHPL’ or ‘the Company’), has set up a project comprising a state of the art shopping mall, a luxury hotel, banquet halls and residential apartments. The ratings reflect the Company’s association and strong support from Nishat Group, one of the leading business conglomerates of Pakistan. With the mall and the hotel operating at maximum possible capacity due to COVID-19, the Company’s main focus is operational sustainability in these challenging times. Occupancy in the hotel and mall footfall remained fluctuating since certain level of restrictions continued in order to curtail virus spread. Uncertainty prevails on account of third/fourth wave, making it difficult to determine when operations achieve optimum level.

As per a group level strategic move another Nishat Group company namely, Nishat (Gulberg) Hotel and Properties Limited (“Nishat Residences”) has been merged with NHPL. This will boost company’s revenues in the near future. Furthermore, the financial profile continued to be stretched due to moderate leveraging – post debt consolidation – and adequate coverages. The financial risk profile witnesses some respite particularly on the back of Government and SBP given initiatives that provided much needed support, predominantly interest rate cut will provide relief to cashflows as debt servicing burden lessens. The ratings take comfort from demonstrated group support and commitment (capital injection from sponsors).

Post Lockdown, varying footfall and occupancies will remain key challenges for the industry. PACRA monitors the changing business dynamics and will take rating action accordingly. Maintaining cashflows from hotel operations and operating the mall at optimal capacity amid Covid-19 outbreak remains imperative. Future cashflow prospects with respect to the sale of apartments is vital. Interest saving will help in maintaining the cash flow of the Company, however, margins remained subdued. Meanwhile, given sizable leveraging, group support remains critical for the ratings.

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