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PACRA Assigns Initial Entity Ratings to Stylers International Limited

Lahore, November 24, 2022 (PPI-OT):Stylers International Limited (Stylers) is a prominent textile venture of US Group. The group companies operate under the umbrella of AJ holdings – the flagship HoldCo of the group. Sponsors exercise oversight of the businesses; professional management are well-equipped and well-experienced, and spearhead the individual companies. Strategic direction is meticulously worked out and rigorously followed once decided and finalized. The Company’s management has experienced professionals, aided by comprehensive reporting, where operations of the Company are supervised with complete autonomy.

The assigned ratings derive comfort from Styler International’s association with the US Group. The majority of the sales revenue for the Company comes from export sales, which account for 94.4% of total sales revenue. The main export destinations in FY22 were the US and European countries (Spain, Germany, France). All exports are made through L.C’s and other financial documents. Stylers International continues to maintain a favourable capital structure and strong coverages signifying a robust financial profile.

Going forward, the State of an Art expansion project (Project Sunshine) is under construction which will enhance the production capacity from the current 9.4M garments gradually to 12M garments per annum. Apart from Project Sunshine, the company will continue capital expenditure on a routine basis. During FY22, Pakistan’s textile exports surged to $19.3bln (recording a growth of 26%).

Exports grew owing to increased volumetric growth of (16% YoY) in the value-added segment, a steep rise in global demand, and record high cotton prices. Under the value-added category, the knitwear segment remained the top performer by posting 34% YoY growth in exports to $5.1 billion in FY22 due to a sharp rise in global demand, especially in the US and European countries.

However, a slowdown is expected in textile demand amid burgeoning inflationary pressures in the exporting destinations, especially in the US and European countries. The ratings are dependent on the Company’s ability to maintain a strong business profile amidst current circumstances. Preserving low leveraged capital structure and sound coverages remain imperative.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com

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