Karachi: The VIS Credit Rating Company Limited (VIS) has affirmed the entity ratings of The Searle Company Limited (TSCL) at 'AA-/A-1', reflecting high credit quality and a stable financial outlook. The long-term 'AA-' rating denotes strong protection factors with modest risk, while the short-term 'A-1' rating suggests high certainty of timely payment and excellent liquidity factors. This update revises the previous outlook from 'Negative' to 'Stable', a significant change from the last rating action on May 19, 2023.
According to VIS Credit Rating Company Limited, the ratings are supported by TSCL’s strong market position within the pharmaceutical industry, which benefits from non-cyclical demand and recently deregulated drug pricing. The company, ranking among the top five in revenue within the country, is poised to benefit from the deregulation of non-essential drug prices, enhancing its substantial non-essential drug portfolio. Furthermore, TSCL's strategic investments, including the acquisitions of Stellar Ventures and Searle IV Solutions Pvt Ltd, aim to broaden its product offerings and expand into the GCC markets, marking significant growth opportunities. However, the company faces challenges such as inflationary pressures impacting profit margins and high debt servicing costs which have strained operating cash flows. To mitigate these issues, TSCL has initiated a strategic disposal of its subsidiary, Searle Pakistan Limited, aimed at deleveraging its balance sheet and enhancing profitability. This move is crucial for maintaining the stability of TSCL’s ratings going forward, with liquidity metrics and the management of rising payables being critical areas of focus.