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PACRA Maintains the Entity Rating of AL-Textile (Private) Limited

Lahore, May 06, 2022 (PPI-OT):The assigned ratings incorporate AL Textile’s good operating track record with a modest presence in the textile sector, depicted by its niche market operations and adequate margins. The Company’s installed capacity hovers around 25,200 spindles. Presence of senior management team that possesses considerable experience in the textile is positive. The Company’s sales mix remain titled towards local market where topline clocked at PKR 4.3bln (FY20: PKR 2.8bln) primarily attributable to enhanced yarn prices. Recently, gross and operating profitability recorded notable improvement; trend should sustain. Same trend displayed in margins where improvement is witnessed.

The financial risk is revealing high leveraging, improved gross coverage and improved working capital cycle. The ratings take comfort from the explicit commitment of sponsors to provide support to the Company. During the period July-December FY21-22, textile exports of the country surged 26 percent YoY, fielding $9.39 billion in total export remittances, as compared to $7.44 billion in the same period last year. This is attributable to increase in demand for textile products internationally and channeling of export orders towards Pakistani market. On a YoY basis, the exports of value-added textile items increased in both quantity and value in December 2021.

The ratings are dependent on Company’s ability to sustain its business profile while maintaining margins. Meanwhile, maintaining a moderately leveraged capital structure and adequate coverages is vital. Any significant deterioration in profits and/or coverages will have a negative impact on ratings.

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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