Karachi, August 01, 2022 (PPI-OT):VIS Credit Rating Company Limited (VIS) has maintained entity ratings of Indus Home Limited (IHL) at ‘A-/A-2’ (Single A Minus/A-Two). Outlook on the rating has been revised from ‘Positive’ to ‘Stable’. Long-term entity rating of ‘A-’ reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-2’ indicates good certainty of timely payment, liquidity factors and company fundamental factors are sound. Previous rating action was announced on May 25, 2021.

Ratings factor in double-digit growth in topline post-COVID-19 contributed by higher average selling prices and volumes. With plans on adding new retail clientele and current order pipeline, sales revenue is expected to sustain this growth momentum, going forward. The revision in rating outlook incorporates weakening in profitability profile on a timeline basis due to rising input costs and inability to pass on the impact of the same to the clients since prices are locked for a quarter or for a season.

Impact of rising interest costs associated with elevated debt levels may put pressure on the thin net margins of the Company. However, support is drawn from the commencement of spinning unit which is projected to improve margins of the company. Projected improvement in margins through enhancing operating efficiency because of backward integration is considered important.

Ratings take note that while some recovery was witnessed in FY22, cash flow coverages remain under pressure against elevated outstanding obligations. Debt serving ability remained satisfactory at the end of the period, and there was sufficient coverage of stock-in-trade and trade debts against short-term borrowings as well. Leverage indicators have increased over time to finance backward integration and working capital needs. Improving capitalization indicators over the rating horizon through meeting projected profit levels and retaining the same is considered important from a ratings perspective.

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/