Karachi, December 07, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Masco Spinning Mills (Private) Limited (‘MSMPL’ or ‘the Company’). The medium to long-term rating of ‘BBB+’ reflects adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of ‘A-2’ indicates good certainty of timely payment, liquidity factors and company fundamentals are sound and access to capital markets is good. Outlook on the assigned ratings is ‘Stable’.
MSMPL operates in the cotton yarn spinning business, wherein performance is sensitive to cyclicality in cotton prices, which is further determined by crop yield. Historically, margins and financial performance of textile players have depicted volatility. Moreover, competitive intensity is high due to the commoditized nature of the product. Even though MSMPL’s reliance on cotton availability is lower than peers, the Company does depict a similar business risk profile, as can be ascertained from the volatility in gross margins. The assigned ratings incorporate the quantum and customer concentration inherent in MSMPL’s revenue base.
MSMPL’s financial risk profile is viewed to be on the lower side, as gearing has remained below 0.6x through the last 4-year period (FY19-22). As the Company has not paid any dividends since inception, internal capital generation has been adequate to support growth in business. The cash flow coverage indicators are adequate and compliant with the assigned rating. Going forward, there are plans for additional mobilization of debt during the rating horizon to finance planned capital expenditure. Incorporating the same into our projections, the Company’s gearing is projected to remain below 1x through the rating horizon. The assigned rating remains dependent on the maintenance of business and financial risk indicators.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/