PACRA upgrades Ghandhara Automobiles’ rating to A+

October 19, 2026 (MLN): The Pakistan Credit Rating Agency Limited (PACRA) has upgraded the long-term entity rating of Ghandhara Automobiles Limited (PSX: GAL) to A+ from A, while maintaining its short-term rating at A1 and outlook at Stable.

The rating upgrade shows GAL’s sustained revenue growth for the second consecutive year, improving profitability, market share gains in the truck and pickup segments, and a strong financial profile.

According to PACRA, the company operates under the Bibojee Group of Companies and distributes and assembles commercial vehicles in Pakistan. It maintains strategic collaborations with China’s Anhui Jianghuai Automobile Co. Ltd. (JAC Motors) for light, medium and heavy-duty trucks, alongside brand associations with Dongfeng and Renault Trucks.

The company’s JAC T9 Hunter (4x4) and T9 Frison (4x2) pickups, launched in October 2025, maintained strong market acceptance during FY26, supported by their features and competitive pricing. A plug-in hybrid electric vehicle (PHEV) variant is planned for January 2027.

At the industry level, truck and bus sales increased to approximately 8,424 units in FY26 from 5,232 units in FY25, representing growth of around 61% year-on-year, following a 98% increase in the preceding year.

The growth was primarily driven by lower interest rates and improved access to auto financing, supported by exchange rate stability, industrial recovery and GDP growth of approximately 3.7%.

According to Pakistan Automotive Manufacturers Association (PAMA) data, GAL’s share in the truck segment increased to around 10% in FY26, with sales of 778 units, compared with approximately 4%, or 198 units, in FY25.

In the light commercial vehicle (LCV) category, the company’s market share through its JAC pickups rose to around 23%, with sales of 2,443 units, compared with approximately 13%, or 1,274 units, in the previous fiscal year.

During FY26, GAL assembled approximately 11,673 vehicles at its Port Qasim facility, up from 7,799 units in FY25. Capacity utilization exceeded the plant’s designed single-shift capacity, while an ongoing Paint Shop upgrade, including a Robotics Top Coat Line, is expected to support further growth in production volumes.

The company’s consolidated revenue increased to approximately Rs47 billion in FY26 from Rs34.5 billion in FY25. Its gross margin improved to around 20.4% from 18.4%, while the net margin increased to 13.6% from 11.9%.

Meanwhile, the bottom line rose to approximately Rs6.4 billion from Rs4.1bn, supported by higher profitability and an increased contribution from its associate, Ghandhara Industries Limited.

PACRA noted that GAL’s financial risk profile remains strong, characterized by healthy cash flows and coverage ratios. Total debt declined to approximately Rs674 million, comprising entirely concessionary long-term borrowings, with no reliance on short-term debt.

Consequently, the company’s leverage ratio fell to around 3.2% in FY26 from 5.6% in FY25. However, its working capital cycle lengthened as customer advances unwound.

The agency also highlighted the supportive demand outlook for the automotive sector. The Automotive and Auto Parts Manufacturing Policy 2026–31, which received in-principle approval in September 2026, and fleet modernization under the National Transport Policy 2018 are expected to support demand for modern, fuel-efficient and new energy vehicles.

However, the cyclical nature of the commercial vehicle industry, sensitivity to interest rates and gradual tariff liberalization envisaged under the new auto policy remain key considerations.

PACRA emphasized that the ratings will depend on GAL’s ability to sustain revenue growth and profitability, generate sufficient operating cash flows to meet working capital and expansion requirements, and manage competitive pressures while strengthening its market position.

The company’s independent Board and professional management team, along with its continued commitment to regulatory compliance and governance standards, further support its operational credibility and stakeholder confidence.

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