Karachi, The credit ratings for Shahbaz Garments (Private) Limited have been reaffirmed by VIS Credit Rating Company Limited at 'A-/A-2', indicating a stable financial outlook and good credit quality. The medium to long-term rating of 'A-' suggests adequate protection factors, although subject to changes in economic conditions. The short-term rating of 'A-2' reflects strong liquidity and access to capital markets, with minimal risk factors.

According to VIS Credit Rating Company Limited, the reaffirmation reflects Shahbaz Garments' sound business and financial practices in the challenging textile sector of Pakistan. The company, a subsidiary of Beltexco Limited and ultimately owned by Canada's Pangea Limited, has sustained its market position through robust sales and operational strategies. The sector is characterized by economic cyclicality and intense competition, heavily influenced by both domestic and international economic trends.

The financial updates from Shahbaz Garments show revenue growth driven by higher sales volumes and unit prices, which improved the gross margin in the calendar year 2022. Despite some pressure from rising costs and finance expenses, the company benefited from interest income and foreign exchange gains. However, in the first nine months of 2023, the company faced a slight contraction in sales volume and an increase in raw material costs, which affected the gross margin.

The company's financial risk profile remains strong, with improved net profitability and debt service coverage ratio consistently above three times in the past two calendar years. Despite some bottom-line pressures in 2023 due to increased operating costs and a challenging economic environment, Shahbaz Garments has managed to maintain a healthy liquidity profile and is expected to see sustained sales growth.