Lahore: The Pakistan Credit Rating Agency (PACRA) has reaffirmed its stable 'A' long-term and 'A2' short-term entity ratings for Sarena Textile Industries (Pvt.) Limited, reflecting the company's strong position in the textile manufacturing and export sectors.

According to The Pakistan Credit Rating Agency Limited, Sarena Textile, known for its semi-vertical integration, has maintained robust growth in its core operations of fabric dyeing, weaving, and garment production. The company has successfully carved a niche in the market with specialized materials for uniforms and fire protection and holds the licensing for PROBAN® in Pakistan. Despite significant challenges like raw cotton price inflation, high energy costs, and elevated finance expenses, Sarena Textile has shown a commendable annual growth of 12%, with its revenue reaching PKR 26 billion for the nine months ending in FY24.

The company's success is notably supported by its strong export presence, especially in the European market, which has bolstered its business sustainability. Management has been proactive in aligning financial performance with projections, including the execution of capital expenditures for solar installations to manage rising energy costs. The board, dominated by sponsor members, along with a seasoned management team, has been pivotal in navigating the complexities of the textile industry.

Sarena Textile's financial risk profile remains adequate, with a leveraged capital structure that is well-managed through a combination of internally generated cash flows and short-term borrowings. The company's ability to manage its working capital cycle effectively remains a key factor in its rating.

The future ratings are contingent upon the company's continued ability to navigate the operational and financial challenges, maintain prudent working capital management, and ensure profitability and cash flow adequacy from its core activities. Maintaining a balanced debt matrix is crucial for sustaining its current ratings.