Karachi, July 19, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Digital World Pakistan (Pvt.) at ‘A-/A-2’ (Single A Minus /A-Two). The long-term rating of ‘A-’ denotes good credit quality coupled with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments. Liquidity factors and company fundamentals are considered sound. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on June 30, 2021.

The assigned ratings of DWPL take into account sponsors’ industry experience, particularly in the end-to-end supply chain management, strong brand recognition and loyalty among customers in the consumer durable industry and long-standing business relations with vendors and dealers.

The ratings draw comfort from a significant uptick in sales during FY21 on the back of volumetric growth and rising prices. Gree ACs continue to account for a major proportion of revenue, followed by EcoStar TVs. Topline of the company closed over 20% higher than corresponding period in previous year and hence a YoY increase of over 20% is also projected for full year. Profitability indicators have also followed a similar pattern over the period. Improvement was observed in gross margins, as the company was able to successfully pass on higher raw material costs and freight charges to the customers because of its strong position in the market. This translated into higher net margins, despite a noticeable increase in distribution and selling costs in FY21 on account of advertising related expenditure.

Liquidity profile of the entity remains at an adequate level. Funds from Operation (FFO) of the company depicted improvement in FY21 on the back of higher profits with cash flow coverages being maintained at sufficient levels. A healthy growth in the equity base has improved leverage and gearing ratios in the review period. Maintaining capitalization indicators and cash flow coverages at similar levels over the rating horizon is considered important.

For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan
Tel: +92-21-35311861-72
Fax: +92-21-35311873
Email: bilal@jcrvis.com.pk
Website: https://www.vis.com.pk/