Karachi: VIS Credit Rating Company Limited has reaffirmed the credit ratings of Al-Ghazi Tractors Limited (AGTL) at ‘A+/A-1’, indicating good credit quality and a strong likelihood of timely repayment obligations. The outlook on these ratings is stable.

According to VIS Credit Rating Company Limited, the ratings reflect AGTL’s strong backing from prominent multinational conglomerates, Al Futtaim Industries Company LLC and CNH Industrial (CNHI), with AGTL serving as the exclusive manufacturer of “New Holland” tractors in Pakistan. Despite challenges in maintaining market share against competitors with higher horsepower tractors, AGTL plans to introduce a new high horsepower model in the fourth quarter of 2024 to regain its competitive edge.

The company has seen sound revenue growth and an increase in gross margin, benefiting from improved material procurement processes and the ability to pass partial costs to customers. Net profits have also seen double-digit growth due to these factors, coupled with a notable decrease in financial charges. AGTL’s liquidity profile has improved, supported by sufficient cash flows and strong debt coverages, enhancing its capitalization profile over the review period.

The continuation of AGTL’s ratings depends on maintaining its profit margins, coverage ratios, and managing low debt levels moving forward.