Karachi: VIS Credit Ratings Company Ltd. (VIS) has upgraded the credit ratings of Everfresh Farms (Private) Limited (EFPL) from BBB+/A-2 to A-/A-2, reflecting the company's improved financial stability and good credit quality amidst challenging economic conditions. This upgrade, announced on August 02, 2024, points to a stable outlook and a stronger likelihood of timely repayment of obligations.

According to VIS Credit Rating Company Limited, the upgrade comes after a detailed review of EFPL’s operational performance and financial metrics. Established in 2008 and part of the diversified Shafi Group of Companies, EFPL has grown into a significant player within Pakistan's packaged milk industry, known for its milk production and agricultural goods. The medium to long-term rating of 'A-' suggests that EFPL has adequate protection factors, while the short-term rating of 'A-2' indicates solid liquidity factors supporting the company's short-term obligations.

The assigned ratings consider the dynamics of the packaged milk industry, which is characterized by non-cyclical sales but faces seasonal fluctuations in milk production and intense competition. Despite these challenges, there is considerable growth potential in converting consumers from loose to packaged milk, driven by increasing awareness of food safety and quality.

Financially, EFPL has shown resilience with a profitability profile that has rebounded in the first nine months of the fiscal year 2024 after facing pressures from rising fodder costs the previous year. The company benefits from low debt levels and healthy liquidity and coverage ratios, contributing to its upgraded ratings.

The future outlook for EFPL remains stable, provided that the company continues to navigate industry competition and manage the impacts of recent tax increases effectively. Continued relationships with major clients like Nestlé and ongoing efforts to maintain robust financial metrics will be critical in sustaining this positive rating trajectory.