Power Cement long-term rating reaffirmed at ‘A-’

January 22, 2026 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Power Cement Limited (PSX: POWER) at ‘A-/A2’, with a stable outlook.

The medium- to long-term rating of ‘A-’ indicates good credit quality with adequate protection factors, while the short-term rating of ‘A2’ shows a strong likelihood of timely repayment of short-term obligations supported by sound liquidity.

Previous ratings action was declared on December 23, 2024.

Power Cement, incorporated in 1981 and listed on the Pakistan Stock Exchange since its conversion into a public limited company in 1987, is engaged in the manufacturing, selling, and marketing of cement, including various cement varieties.

The assigned ratings take into account the Company’s association with the Arif Habib Group, which provides financial flexibility, strategic oversight, and support during periods of elevated leverage and sector stress.

The cement sector in which Power operates remains cyclical and energy-intensive, exposed to fluctuations in construction activity, fuel costs, and exchange rates.

VIS noted that these risks are partly offset by Power Cement’s established operations, diversified sales channels, and a growing export presence.

During the period under review, the Company saw improved profitability despite a contraction in revenues, driven by cost rationalization, lower fuel and power expenses, and reduced finance costs following debt repayment.

Operational efficiency remains a key strength, supported by increased reliance on renewable energy and planned wind power initiatives.

Capital structure indicators have strengthened due to reduced debt and higher equity, improving leverage and debt-servicing capacity.

Liquidity has also improved, underpinned by positive operational cash flows and stronger coverage of short-term obligations.

Governance and management practices are broadly in line with regulatory requirements, with ongoing efforts to enhance board independence.

VIS highlighted that the ratings remain sensitive to sector recovery, construction industry growth, and government policies.

Key factors going forward include the Company’s ability to strengthen capitalization internally, enhance liquidity, and normalize coverage indicators.

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