Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings for Associated Technologies (Pvt) Limited (ATL) at A-/A2 with a 'Stable' outlook. This decision reflects ATL's sound credit quality and its ability to meet short-term obligations, despite varying economic conditions.

According to a statement by VIS Credit Rating Company Limited, ATL has refocused its business strategy, now concentrating solely on the fabrication and erection of steel towers. This transition followed the transfer of its site services segment to its subsidiary, Tower Power (Pvt) Limited, in late 2022.

The company's improved business risk profile is attributed to relaxed import restrictions, reduced policy rates, and stabilizing economic conditions. The TowerCo industry, serving the telecom and power sectors, is expected to experience growth due to increased demand from 4G network expansion and broader broadband adoption. The power sector's demand is anticipated to rise with the potential privatization of Distribution Companies (DISCOs) and population growth.

Financially, ATL has seen a continuous growth in revenue, driven by new tower constructions for its subsidiary, TPL, and projects with DISCOs and the National Transmission and Despatch Company (NTDC). However, gross margins have slightly decreased due to rising raw material costs. Liquidity indicators remain favorable, although debt service coverages are under pressure from low funds from operations. Nevertheless, ATL benefits from sufficient cash reserves to meet its financial obligations, and its capitalization profile remains robust, supported by lower net debt and a higher equity base.

The ratings will depend on ATL's ability to sustain sales growth, maintain stable margins, and manage low gearing while improving financial coverages.