Lahore, April 29, 2022 (PPI-OT):Mughal is a known name in the steel industry. The Company’s business profile has sustained and improving, over the last few years. The Company has diversity in its product slate as its operating segments comprising of ferrous and non-ferrous segments. Furthermore, the establishment of strong brands like ‘Mughal Supreme’ gives competitive edge to the Company. The ratings incorporate the essence of material advancement that Mughal has achieved in terms of further diversity in revenue streams.
The highlighted achievement through geographical diversification in revenue stream, led to significant contribution from exports of Copper Ingots to China (i.e.; ~16% of revenue contribution) which not only added to the top line but also enhanced profitability and also expected to continue the trend, going forward. Mughal has attained formidable market share by penetrating retail segment. The strategic realignment executed over the last few years by channeling 60% volumes (previous: 10% of sales mix) to retail market has been fruitful. The Company’s revenues witnessed an increase (FY21: PKR 44.9bln, FY20: PKR 27.3bln) attributed to an uptick in sale volumes, positive price indicators and reinvigorating economy. The financial risk profile incorporates healthy capitalization indicators, liquidity profile is evident from strong cash flows and improved coverages.
The ratings incorporate the essence of material advancement that the Company has achieved in terms of further diversity in revenue streams, which will add not only to the top line but also enhanced profitability, going forward. Consequently, company made prominent growth in non-ferrous segment and further decided to enhance this segment. Mughal issued a Sukuk of PKR 3,000mln which will be used for meeting working capital requirements. The ratings assigned takes comfort from the debt payment account mechanism, apart from the conventional security, collateralized on the back of Sukuk.
The ratings are dependent upon the company’s ability to sustain its healthy business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remain important. Moreover, upholding of governance framework is vital.
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