Lahore: The Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of Masood Textile Mills Limited, highlighting the company's robust position in the value-added textile sector. The company's strategic focus on high-margin, fashion-oriented garments, and its long-standing partnerships with international brands are pivotal to its business profile. Despite a slight revenue decline, Masood Textile's profit-centric strategy and upcoming renewable energy projects demonstrate resilience amid industry challenges.

Masood Textile Mills Limited (MTM) operates as a fully vertically integrated textile manufacturer, engaging in all stages of the textile value chain. The company's operations include spinning, knitting, dyeing, embroidery, and apparel manufacturing, with a strong emphasis on high-quality knitted apparel designed for contemporary wear.

The company's revenue experienced a marginal decline of 2.3% year-over-year, amounting to PKR 58.7 billion in FY24. This decrease was primarily due to a strategic shift towards higher-margin products, which proved effective as evidenced by a consolidated profit after tax of PKR 661.7 million over the past two quarters.

MTM has announced capital expenditures to develop a 12-megawatt solar power plant, with partial operationalization expected by 2025, alongside a biomass project to mitigate increasing energy costs. Despite an adequate financial risk profile, MTM's working capital management remains stretched, largely financed through short-term borrowings.

Global industry challenges persist, with evolving consumption trends and competitive pricing pressures impacting the textile sector. The company faces additional hurdles, such as high regional energy tariffs and a deferred 29% tariff on exports to the U.S., a significant market for MTM.

The ratings reflect the necessity for improved profitability and business expansion. Efficient use of short-term borrowings and adherence to debt management are crucial for sustaining the current ratings.