Khaadi Pakistan gets initial long-term AA- rating as it readies for IPO

October 12, 2026 (MLN): Khaadi Pakistan Limited (formerly Khaadi Pakistan SMC Pvt Limited) has been assigned initial entity ratings of AA- in the long term and A1 in the short term, with a stable outlook, as of October 9, 2026.

The ratings were assigned by the Pakistan Credit Rating Agency (PACRA).

The ratings reflect its standing as one of the country’s leading fashion retail brands, backed by strong sponsors, and its network of 31 domestic outlets, 11 international stores, three fulfilment centres in the UK, US and UAE, and an e-commerce channel.

The company has been shifting from wide expansion to larger experience-led stores of up to 45,000 sq ft, with 18 of its 31 domestic outlets already converted, and plans to fund further expansion through internal funds and IPO proceeds.

Net sales stood at Rs 17.08bn in 6MCY26, up 35.9% on a period-adjusted basis, with exports making up 10.61% of gross sales, while gross, operating and net margins continued to improve, although CY25 profit included non-cash fair value gains and asset write-offs that largely offset each other.

The company bought the “Khaadi” brand usage rights from its parent for Rs 8bn, payable on demand after a 12-month grace period, an arrangement not expected to burden its finances.

A shift towards long-term borrowing to fund capital expenditure lifted the current maturity of long-term debt and cut debt service coverage to 1.4x from 3.8x in CY25, which remains adequate.

Working capital is efficient on supplier credit, but liquidity is thin amid heavy capex and dividend payouts, and the capital structure is geared.

Future ratings will depend on sustaining growth and margins, cutting leverage and strengthening liquidity through the IPO, along with better coverage, prudent dividends and protection of the brand’s competitive position.

Khaadi is a wholly owned subsidiary of Weaves Corporation Limited, which is 80% held by Weaves Holding Limited and 20% by the International Finance Corporation (IFC).

 Under the pre-IPO mechanism, 250mn shares have already been placed, with another 250mn to be offered through the IPO, for which Arif Habib Limited is the consultant.

As part of the listing process, the company has converted from a single member company to a public company and is completing the required regulatory and corporate governance compliances, including alignment with the Code of Corporate Governance.

Incorporated in 2015, Khaadi is led by Chief Executive Officer Shamoon Sultan, who has over 25 years of industry experience, and its board comprises three executive members, including the CEO, and four independent members, including the chairperson.

Its sustainability efforts include a zero-carbon, self-sustaining green store in Mardan and the “Kreate Your Mark” initiative, which gives women-led small businesses space to sell their products in its experience stores.

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