Azgard Nine secures BBB rating with stable outlook

November 25, 2025 (MLN): The Pakistan Credit Rating Agency (PACRA) has assigned initial entity ratings of BBB (Long Term) and A2 (Short Term) to Azgard Nine Limited (PSX: ANL), with a Stable outlook, showing the company’s integrated textile operations and improving business fundamentals.

The company's filing on PSX revealed today. 

Azgard Nine, a well-established player in Pakistan’s denim sector, operates a fully integrated composite setup covering open-end spinning, denim fabric manufacturing, and value-added apparel.

Supported by modern machinery and a strong international client base, the company has continued to post steady revenue growth.

During 1QFY26, ANL recorded Rs9.4bn in topline (FY25: Rs40.6bn; FY24: Rs36.5bn), driven largely by rising garment exports, which contributed Rs7.0bn.

Gross margins saw slight moderation due to pricing pressure in yarn and garments, though the apparel segment remains the primary value driver.

ANL’s cost-efficient model using nearly 65% pre- and post-consumer waste in yarn production continues to support profitability.

The company posted Rs115m in PAT during the quarter, supplemented by higher non-core income from bank deposits.

The company has undergone major debt restructuring, beginning in 2010 and followed by a second restructuring in 2018 to address liquidity constraints.

Measures included divestment of non-core assets, a right issue of Rs365m, and conversion of Rs5bn into interest-free zero-coupon PPTFCs maturing in 2031.

While one manufacturing unit has already been sold, the deadline for the second unit’s disposal has been extended to December 2025. Preference shares of Rs148m were fully settled in 2024.

Despite pending obligations that continue to pressure liquidity, ANL has maintained strong financial discipline and timely servicing of debt.

The company also benefits from SBP’s Export Refinance Scheme, reducing working capital financing costs.

On the operational side, ANL has advanced its energy efficiency plan. A 2.5 MW solar project is already online, while a 6 MW biomass project, funded fully through equity, is expected to become operational by the end of 1HFY26.

PACRA noted that the ratings will remain dependent on ANL’s ability to sustain performance, improve cash flows, and meet restructured debt obligations.

Any deterioration in its financial risk profile may impact the assigned ratings.

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