Karachi, December 30, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has upgraded the medium to long-term entity rating of Shafi Lifestyle (Pvt.) Ltd. (SLPL) from ‘BBB+’ (Triple B Plus) to ‘A-’ (Single A-). The short-term rating has been maintained at ‘A-2’ (Single A-Two). Outlook on the assigned ratings has been revised from ‘Positive’ to ‘Stable’. The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment with sound liquidity factors and company fundamentals. Access to capital markets is good sand risk factors are small. Previous rating action was announced on January 31, 2022.

SLPL is a part of ‘Shafi Group’, having presence in textile, leather, food and footwear. The company is primarily engaged in production and sale of high-end leather footwear primarily targeting export markets. The assigned ratings take into account positive momentum in revenue driven by growth in volumetric sale and average prices. While notable client concentration is present, the risk is largely subsided as the primary client base constitutes of wholesalers with whom the company has long-standing relationships underpinned by quality and pricing. The company has been able to largely transfer the impact of cost escalation in raw material prices owing to the premium nature of their products and weakening PKR provides support to exporters. Gross margins have remained sizeable whilst faced some pressure on the account of growing inflation and some lag in passing on its impact.

The liquidity profile remained satisfactory in terms of cash flow coverages and working capital management. Capitalization indicators have remained within manageable levels despite increase in short-term borrowings, reflecting adequate risk absorption capacity of the company. Furthermore, the ratings factor in higher production capacity emanating from continued capacity enhancement and optimization of manufacturing processes to meet growing demand. The new facility, with addition of another production line, is projected to be completed by end-Jun’23; the company has been financing majority of these capital expenditure through own sources. Going forward, the ratings will remain dependent on achieving projected growth in revenues and profitability while maintaining liquidity and capitalization profile.

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/