PACRA maintains entity ratings of Ghandhara Tyre & Rubber Company Ltd

MG News | August 05, 2025 at 11:42 AM GMT+05:00
August 05, 2025 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of Ghandhara Tyre & Rubber Company Limited (PSX: GTYR) at "A+" for the long term and "A1" for the short term with a stable outlook forecast, the latest press release issued by PACRA showed.
GTYR is a leading player in Pakistan’s automotive tyre
manufacturing industry.
The Company serves a diverse customer base that includes
Original Equipment Manufacturers (OEMs), the replacement and aftermarket
segment, institutional clients such as government and defense, and export
markets.
The ratings reflect GTR’s established market presence,
strong business profile, and wide product portfolio across Passenger Car Radial
(PCR), Light Truck/Bus (LTB/R), Agricultural (Agri), Off-the-Road (OTR), and
two-wheeler tyre segments.
As the only domestic producer of PCR tyres, GTR caters to a
significant portion of OEM demand.
In FY25, Pakistan’s auto industry witnessed signs of
recovery supported by improving macroeconomic conditions.
Stabilization of exchange rates, gradual reductions in
inflation and policy rates, and improved consumer confidence contributed to a
rebound in sector activity.
The relaxation of restrictions on the establishment of
Letters of Credit (L/Cs) further enhanced raw material availability and
production continuity.
According to PAMA’s latest data (11MFY25), passenger car
sales grew by approximately 32%, light commercial vehicles by 66%, trucks by
95%, and buses by 91%, reflecting a broad-based recovery in vehicle demand and
strengthening OEM performance.
Currently, OEMs contribute 40% of GTR’s sales while the
replacement market accounts for 60%.
However, during 9MFY25, GTR’s topline declined by
approximately 9.4% year-on-year to PKR 13.9bn.
This contraction was mainly driven by a significant
reduction of nearly 36% in farm tyre sales volume across OEMs and sluggish
demand from the replacement market, influenced by subdued rural purchasing
power amid lower wheat prices.
Profitability came under further pressure from higher input
costs, including raw materials and energy tariffs, which could not be fully
passed on to customers.
This led to margin compression across all levels and
underpins the continuation of the rating watch.
The financial risk profile reflects a stretched working
capital cycle, modest cash flow generation, and moderate debt servicing
metrics.
The capital structure remains leveraged, with borrowings
primarily concentrated in short-term facilities to support working capital
needs.
Looking ahead, GTR is focusing on consolidating its domestic
market position and increasing export volumes through targeted investments in
capacity enhancement and operational efficiency initiatives.
The recent commissioning of a 2MW solar energy project
highlights its commitment to sustainability.
Engagements with new OEMs, particularly for SUV tyres, are
progressing, while product innovation continues to support brand strength.
Backed by robust sponsorship, a structured governance
framework, and technical collaboration with Shandong Huasheng Rubber of China,
GTR maintains alignment with international quality standards and is positioned
to capture long-term growth opportunities.
The ratings are dependent on the Company’s ability to
improve its business risk vis-à-vis financial risk profile along with
sustainable margins.
Cautious management strategies amidst a challenging industry
environment are pertinent.
Moreover, prudent
management of financial affairs remains important.
GTR was incorporated in 1963 and was listed on the Karachi
Stock Exchange in 1982.
It is engaged in the manufacturing & marketing of a
complete range of automotive radial tyres.
At present, the Company operates with an annual production
capacity of around 4.4mln tyres.
The Company is majorly owned by two sponsors, Bibojee
Services (Pvt.) Limited and Pak Kuwait Investment Company Limited (PKIC),
holding approximately 28% and around 30% shares, respectively.
The CEO - Mr. Hussain Kuli Khan has an overall experience of approximately 29 years and has been trained by Continental Germany in their plants. An able management team assists him.
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