Karachi, VIS Credit Rating Company Limited has upgraded the entity ratings of Staple Foods (Private) Limited from ‘A-/A-2’ to ‘A/A-1’, reflecting the company’s enhanced credit quality and financial stability. This upgrade underscores Staple Foods' robust position in the rice export market and its effective management of liquidity and debt.

According to VIS Credit Rating Company Limited, the upgrade is prompted by Staple Foods' strong performance in the international rice market, particularly with its Basmati and IRRI rice varieties. The company, which sells its products under the brand name 'Anmol', has seen significant recognition in export markets, with rice exports constituting over 90% of its total revenue. Notably, Super Basmati Brown and IRRI White rice account for more than half of the company’s exports.

The ratings upgrade takes into account several positive developments in Staple Foods’ operational and financial metrics. Improved crop yields and an international ban on non-basmati rice exports by a major producing country have poised the company for increased exports in FY24. The business benefits from the cyclicality in the availability of rice, an internationally traded commodity, which influences market dynamics and pricing.

Financially, Staple Foods has demonstrated a growing trend in sales, supported by increasing product prices and sustained margins. The company has maintained healthy debt service coverage and low debt leverage, contributing to a sound profitability and liquidity profile. The outlook on the new ratings is stable, reflecting VIS’s confidence in Staple Foods’ ability to maintain its market share and financial health in the foreseeable future.

The continued success of Staple Foods hinges on its strategic market positioning and the ability to navigate the cyclical nature of the global rice market, ensuring it retains its competitive edge and financial robustness.