Karachi, May 18, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Pakistan Tiles (Pvt.) Limited (PTPL). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.
PTPL is involved in manufacturing of ceramic and porcelain tiles, primarily distributed through its associated concern. PTPL is a part of Abu Yousaf Group, mainly engaged in retail trading of wide range of local and imported sanitary items, ceramic and porcelain tiles, kitchen ware and home office furniture for more than two decades. The company started commercial operations in July 2018 and net revenue has depicted a sizeable growth since then on a YoY basis due to already established and growing customer base. Gross margins improved notably in FY21 on account of economies of scale and higher average rates of premium tiles, which contributed nearly half to the topline.
Liquidity position improved in line with higher funds flow from operations and is considered adequate in terms of cash flow coverages. The leverage indicators are also considered manageable. The management expects profit margins to remain largely intact as increasing costs of imported raw material along with fuel and power are passed on to customers as there is a significant price differential between local and imported tiles. However, any relaxation in regulatory import duties on raw material may have negative connotation for the local industry. Meanwhile, the ratings are constrained by weak corporate governance framework. The ratings will remain sensitive to increase in revenue, adequate coverages, further enhancement in capitalization indicators as projected by the management and improvement in governance framework.
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/