Lahore, December 29, 2021 (PPI-OT):Cherat Cement’s Ratings reflect its prominent presence in the cement sector emanating from its major market share (7%) predominately in the north region. The Cement sector’s dispatches have recorded splendid growth and surged by 21% in FY21 as demand in the domestic market accelerated. Export is another avenue. Industry-wide exports have gone up as a new export window is created in the Bangladesh market. The industry’s future demand outlook is positive, in view of the infrastructure projects in the pipeline. The Company’s revenues witnessed an increase (1QFY22: PKR 7.16bln, FY21: PKR 25.21bln, FY20: PKR 17.01bln) attributed to an uptick in sales volumes, positive price indicators and, reinvigorating economy.

Margins in 1QFY22 also improved on account of recently added more efficient Line-III. The Company managed to recoup previous losses and reported profits of PKR 1.19bln and PKR 3.2bln in 1QFY22 and FY21 respectively. The financial risk profile incorporates healthy capitalization indicators, liquidity profile is evident from healthy cash flows and improved coverages. Construction of solar captive power plant and BMR of Line-1 is underway. The Company’s leveraging is currently at an adequate level, especially with the repayments being made. However, the management has projected an increase in the medium to long-term debt to finance greenfield expansion projects costing PKR ~34bln, management is of view to maintain the overall debt quantum within the threshold for the assigned ratings.

Further, the Ratings assigned to Cherat Cement also draw support from the strong financial profile of the Company’s sponsor, Ghulam Faruque Group having a presence across multiple sectors mainly including Cement, Sugar, Packaging, and specialized engineering equipment. The ratings remain dependent on upholding company’s market position along with sustenance of business volumes, margins and achieving optimal utilization of production capacities. Going forward, sustainability in profits for timely repayment of debt remains 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