VIS Assigns Initial Ratings to Thatta Cement with Stable Outlook

Karachi, VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings to Thatta Cement Company Limited (TCCL) at 'A-/A-2', indicating good credit quality and a stable financial outlook. The ratings reflect the company's robust fundamentals, sound liquidity, and effective access to capital markets.

According to VIS Credit Rating Company Limited, the ratings draw on TCCL's historical growth and strategic positioning within the cement industry since its establishment in 1980. Originally launched under the State Cement Corporation of Pakistan, TCCL began operations with a clinker production capacity of 1,000 tons per day, which has since doubled. Following its privatization in 2004 and subsequent public listing in 2008, major stakes were acquired by Sky Pak Holding and Al-Miftah Holding from the Arif Habib Group in 2012.

The ratings benefit from TCCL's medium business risk profile, supported by its role in a moderately competitive sector characterized by an oligopolistic market in the southern region and a stable regulatory environment. The company's strong ties with major government institutions also contribute positively to its rating.

Financially, TCCL has shown notable improvement in its topline in FY23, driven by increased cement prices and a strategic shift from imported to local coal, enhancing both gross and net margins. The company maintains a healthy coverage profile and capitalization metrics, underpinned by minimal reliance on debt financing. The liquidity position is described as adequate, bolstered by significant cash reserves and positive financial developments in the third quarter of FY24.

VIS notes that future ratings will hinge on continued enhancements in TCCL's financial metrics and its ability to sustain its current financial health.