Interloop retains ‘AA-/A1’ ratings with stable outlook

August 12, 2026 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Interloop Limited (PSX: ILP) at ‘AA-/A1’, with the outlook maintained at ‘Stable’.

The ‘AA-’ long-term rating reflects Interloop’s high credit quality, supported by strong protection factors and modest risk, while the ‘A1’ short-term rating indicates a strong likelihood of timely repayment of short-term obligations backed by excellent liquidity.

The ratings show Interloop’s strong market position, vertically integrated business model and sustained revenue growth. The company has continued to expand its production capacity and diversify its product portfolio, particularly in denim and apparel.

VIS noted that Interloop’s consolidated profitability remained under pressure during FY25 due to margin compression in the apparel segment as the business scaled up.

However, profitability showed signs of improvement during the nine months ended March 2026 (9MFY26).

The company’s expansion-led capital expenditure increased leverage during FY25, although capitalization indicators improved in 9MFY26 as major projects approached completion and debt levels moderated. Liquidity remains adequate, while debt and cash flow coverage indicators continue to be strong.

Interloop’s ratings are also supported by management’s focus on improving operational efficiency, maintaining disciplined debt levels and reducing long-term costs through sustainability initiatives.

VIS highlighted fluctuations in global cotton prices and changes in US tariff policies as key external risks for the company going forward.

Interloop is a vertically integrated textile manufacturer with operations spanning hosiery, denim, knitted apparel, seamless activewear and yarns.

The company has a diversified export base and long-standing relationships with major international retailers.

The company employs around 40,000 people across 15 nationalities and has operations in Pakistan, Sri Lanka, China, the US, Europe and Japan.

The previous rating action was announced on August 4, 2025.

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