Lahore: Sitara Heights (PVT) Limited has maintained its entity ratings with a stable outlook, reflecting its established presence in the real estate development sector and a diversified project portfolio. The company's ongoing projects in Lahore and Faisalabad are progressing at various stages, with some key developments advancing beyond critical construction phases and achieving significant sales milestones.
According to The Pakistan Credit Rating Agency Limited, Sitara Heights is currently executing six projects, with five already launched. The company has fully acquired land for all projects, ensuring a stable operational base. Notably, a newly launched housing project in Faisalabad has shown promising market traction. However, the Gold Vista project faces delays and is expected to become part of a proposed Real Estate Investment Trust (REIT) structure, as part of the company's long-term strategy. Despite this, execution timelines remain uncertain.
During the fiscal year 2025, Sitara Heights experienced a decline in revenue to PKR 662 million from PKR 864 million the previous year, primarily due to slower construction progress amid inflationary pressures and liquidity constraints. The company follows an advanced booking model, recognizing revenue based on the percentage of construction completion. Improved capitalization following a reduction in borrowings, along with positive operating cash flows and adequate liquidity, supports the stable outlook revision. However, ratings are constrained by execution risks inherent to the business model and governance limitations due to the lack of independent board representation.
While leverage reduced during the fiscal year 2025, borrowings are expected to rise over the medium term as additional debt is drawn to support ongoing projects. The company's capitalization metrics will remain sensitive to execution timelines and cash flow realization. Sustained improvement in construction progress, timely conversion of receivables into cash, disciplined debt utilization, and consistent disclosure on project execution and revenue recognition are essential to maintaining the current rating profile.