Karachi: In a recent evaluation, VIS Credit Rating Company Limited (VIS) has elevated the entity ratings of The Organic Meat Company Limited (TOMCL) from 'A-/A-2' to 'A/A-1', reflecting the company's strengthened financial profile and promising market dynamics. This upgrade indicates good credit quality with adequate protection factors and a stable outlook, signaling strong confidence in TOMCL's operational and financial stability.
According to VIS Credit Rating Company Limited, the upgrade is supported by TOMCL's prominent role as one of the largest red meat processors and exporters, and its unique position in the offal processing sector within the formal meat industry in Pakistan. The company boasts the largest integrated operations spanning from slaughtering to packaging, the largest fattening farm, and leading export receipts in the halal meat sector, with access to 16 export jurisdictions. TOMCL's innovative approach includes expanding into pet chews and cooked meat products, aiming to dominate these new market segments.
The company's strategic direction has adapted to challenges such as regulatory changes and land availability issues in Karachi. Instead of building a new offal processing facility, TOMCL redirected funds from its initial public offering to acquire Muhammad Saeed Muhammad Hussain Limited (MSMHL), enhancing its offerings in value-added products and strengthening its position in both emerging and developed markets. This move is expected to bolster TOMCL’s growth and diversification strategy.
Despite facing seasonal price variations and a high geographical concentration of sales in the UAE, TOMCL has maintained a robust business risk profile. The company's financial health is highlighted by strong revenue growth, driven by inflationary pressures, though net margins have faced pressures from exchange rate stabilization. The liquidity profile remains healthy, with low leverage and gearing indicators, and growth is anticipated to be supported by internal cash generation.
The ratings are contingent on the successful execution of TOMCL’s expansion plans and the maintenance of its financial metrics moving forward.