Karachi, VIS Credit Rating Company Limited has reaffirmed the entity ratings of Zephyr Textile Limited at 'BBB+/A-2'. The 'BBB+' rating indicates adequate credit quality with sufficient protection factors, while the 'A-2' rating suggests good certainty of timely payments and sound liquidity. The outlook on these ratings, last reviewed on August 30, 2022, is positive.

According to VIS Credit Rating Company Limited, Zephyr Textile Limited, a public listed company, engages in fabric weaving, towel weaving, finishing, dyeing, and processing. The local textile sector faces challenges such as a weak macro-economic environment, high interest rates, inflation, rising raw material costs, an energy crisis, and a global slump in demand, leading to a 10% year-on-year decline in Pakistan's textile exports. Zephyr Textile's diversified revenue stream and an increase in export ratio to 65:35 have been key factors in maintaining moderate growth amid these challenges. The company's decision to develop a garments unit is aimed at value addition and larger exports. The ratings also take into account improvements in profitability, a moderately leveraged capital structure, manageable liquidity, and adequate cash flow coverage. Future ratings depend on the maintenance of gearing, cash flow generation from the new garments segment, and improvement in liquidity indicators.