Karachi, April 22, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of M.K. Sons (Pvt.) Limited (MKSL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on March 05, 2021.
The ratings assigned to MKSL take into account the company’s presence in export oriented value-added textile segment, growth in revenue combined with steady improvement in profitability over the review period, and experience of management team in the relevant industry. Increase in exports was mainly led by higher volumetric sales of made-ups and denim garments as well as favourable prices for the key product categories which positively impacted the profit margins. The management is expecting healthy revenue growth during the ongoing year, mainly led by higher made-ups sales and increased contribution of denim garments segment.
Liquidity profile is considered stressed as reflected in low short-term coverage and marginal current ratio on a timeline basis. Given elevated current maturity for FY22 and notable increase in benchmark rates, liquidity is expected to remain under pressure, going forward. Meanwhile, leverage indicators are elevated due to increased utilization of short-term borrowings for enhanced working capital requirements and mobilization of fresh long-term borrowings to fund capex. Going forward, the ratings are dependent on realization of revenue targets, maintenance of margins and debt servicing coverages, improvement in liquidity, and rationalization of leverage indicators.
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/