Karachi: The VIS Credit Rating Company Limited (VIS) has recently reaffirmed the entity ratings of Fatima Fertilizer Company Limited (FATIMA) at ‘AA+/A-1+’, reflecting the company’s strong financial stability and growth prospects. These ratings indicate a high quality of credit and a strong likelihood of timely repayment of short-term obligations, with the outlook on the ratings deemed stable.

According to VIS Credit Rating Company Limited, the reaffirmed ratings consider Fatima Fertilizer’s robust position in the fertilizer industry, characterized by its low business risk and significant role in ensuring food security, a factor that enhances its strategic importance nationally. The ratings highlight the company’s leading market position as the sole producer of Calcium Ammonium Nitrate (CAN) and a major player in other fertilizer segments.

Fatima Fertilizer, established in 2003 through a joint venture between the Fatima Group and Arif Habib Group, has grown significantly, shown by a notable 47% increase in sales, primarily due to higher sales volumes of Nitrophosphate (NP) and Di-Ammonium Phosphate (DAP) and rising prices of Urea and CAN. Despite facing elevated fuel and power costs that have affected gross margins, the company has managed to maintain healthy net margins due to substantial increases in other income.

The ratings also reflect the company’s conservative capital structure with low leverage, robust cash flow, and effective debt coverage ratios. With its headquarters in Lahore and production facilities in Sadiqabad, Sheikhupura, and Multan, Fatima Fertilizer has a combined capacity of 2.75 million metric tons per annum, supporting its dominant market position.

VIS’s analysis suggests that, with no major expansion plans other than routine maintenance and replacement activities, Fatima Fertilizer is expected to maintain or improve its leverage indicators over the foreseeable future, underpinning the stable outlook of its credit ratings.