Karachi: VIS Credit Rating Company Limited (VIS) has revised the outlook on Rajby Industries' credit ratings from stable to positive while maintaining the long-term and short-term entity ratings at 'A-' and 'A-2', respectively. The ratings indicate good credit quality, liquidity, and a high certainty of timely payment, reflecting Rajby's sound financial policies and market access.

According to VIS Credit Rating Company Limited announcement issued on 15 July 2024, the positive outlook revision is primarily driven by Rajby Industries' improved financial risk profile, evidenced by significant equity growth and reduced gearing. The company, a key player in Pakistan's textile sector, has reported a marginal increase in sales and higher net profit margins for FY23 compared to its peers, primarily through strategic customer and market segment focus. This growth has been accompanied by notable improvements in debt management and profitability metrics.

Rajby Industries' performance is also bolstered by its complete reliance on exports, making it a significant contributor to the country’s export figures. However, the sector continues to face challenges such as economic cyclicality, intense competition, and supply-side risks, including fluctuations in local cotton production and dependencies on imported raw materials, which expose it to exchange rate risks.

The company's financial outlook improvement is further supported by the repayment of long-term loans and the maintenance of zero short-term borrowings as of the third quarter of FY24, enhancing its debt coverage indicators. Looking ahead, Rajby Industries is focused on sustaining its profitability and capitalization, which will be crucial for maintaining and possibly improving its credit ratings in future assessments.