Lahore, April 14, 2022 (PPI-OT):Shahzad Textile Mills Limited is a public listed company which is engaged in manufacturing of yarn and socks. The specifications include ring spun yarn, synthetic blended yarns and wide range of socks. The Company is sister concern of Sargodha Jute Mills and has history of four long decades. The Company’s management involves experienced professionals looking after operations of the Company. Over the last few years, the business profile has strengthened manifold. The Company has successfully achieved diversification in value added segment of socks.
Also, recent rationalization of yarn capacity has enhanced revenue. Revenue base and margins of the company improved attributable to yarn export and expansion of socks unit. During FY21, the Company’s revenues displayed notable improvement to PKR 6.9bln (FY20: PKR 4.3bln). Along with revenue base, operating and net profitability recorded sizable upsurge. The Company has developed customer base at export avenues of North America, Europe and Africa.
Further, penetration in Export markets is planned. The financial matrix reveals moderate leveraging, strengthened coverage and efficient working capital cycle. During the period July-December FY21-22, textile exports of the country surged 26 percent YoY, fielding $9.39 billion in total export remittances, as compared to $7.44 billion in the same period last year. This is attributable to increase in demand for textile products internationally and channeling of export orders towards Pakistani market. On a YoY basis, the exports of value-added textile items increased in both quantity and value in December 2021.
Going forward, the textile sector’s outlook is expected to stay positive in the medium term where the demand for textile products is expected to sustain. In the local market, the textile sector has recorded strong performance. The relief measures introduced by the State Bank of Pakistan such as deferment of loan payments for one year, low-interest rates, and salary refinance scheme also provided comfort to the sector. Many players have also availed the TERF scheme announced by the Central Bank.
This will lead to overall leverage of the sector to increase; however, on relaxed financing rates. The sustainability of demand pattern for the current higher orders from Europe and USA remains essential for the feasible utilization of added capacity by textile players. The ratings are dependent upon the management’s ability to capitalize on growth opportunities in a competitive landscape, operate at optimal level and sustain margins, going forward.
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
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Email: hammad.rashid@pacra.com
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