PACRA maintains stable outlook on Mughal Iron & Steel

October 17, 2025 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained the entity ratings of Mughal Iron & Steel Industries Limited (PSX:MUGHAL) at A+ for long term and A1 for short term with a Stable outlook.

Mughal Iron & Steel Industries Limited, incorporated in 2010 and listed on the Pakistan Stock Exchange, is among the leading manufacturers of ferrous and non-ferrous steel products in the country.

The Company operates with melting, rerolling, and non-ferrous recycling capacities of 590,000 M.T., 630,000 M.T., and 90,000 M.T., respectively.

PACRA’s rating action reflects Mughal’s established position in the steel industry, resilient business model, and continued operational stability despite sectoral challenges.

During FY25, macroeconomic conditions showed improvement, supported by easing inflation and lower policy rates, leading to a modest recovery in construction activity. However, the steel sector’s recovery remained gradual due to high energy tariffs, imported raw material dependence, and regulatory pressures.

Mughal maintained resilience amid these headwinds, with its extensive nationwide distribution network helping sustain market share gains as other producers operated at constrained capacities. The Company’s topline declined slightly to Rs89.5 billion in FY25 from Rs92.4bn in FY24, mainly due to reduced non-ferrous exports and a change in sales mix.

Margins narrowed accordingly, while net profitability remained under pressure from elevated finance costs and taxation. Nonetheless, financial risk improved, with leverage declining to around 48% in FY25 from 57.6% in FY24, and working capital needs met largely through internal cash generation.

Future profitability is expected to benefit from the upcoming commissioning of Mughal Energy an alternative energy project aimed at reducing operational costs and from lower borrowing costs driven by easing policy rates.

Additionally, completion of the ongoing Balancing, Modernization & Replacement (BMR) project is anticipated to enhance production efficiency and strengthen the Company’s financial profile.

PACRA noted that the ratings remain dependent on Mughal’s ability to sustain its sound business position, ensure timely debt servicing, and achieve cost efficiencies through the successful implementation of its energy and modernization initiatives.

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