VIS reaffirms A/A1 ratings for Faisal Spinning Mills

May 21, 2026 (MLN): VIS Credit Rating Company Limited has reaffirmed its entity ratings for Faisal Spinning Mills Limited (PSX:FASM) at A/A1 (Single A/Single A One), maintaining a Stable outlook on the Pakistan Stock Exchange-listed textile manufacturer.

The medium to long-term rating of 'A' reflects good credit quality with adequate protection factors, while the short-term 'A1' rating signals a strong likelihood of timely repayment of short-term obligations backed by excellent liquidity.

The previous ratings action had been announced on February 6, 2025.

VIS noted that while FASM holds an established position across the spinning, weaving, and value-added textile segments, its credit profile continues to face headwinds from thin margins and weak cash flow generation in an intensely competitive market.

The company had recorded losses in FY24, though profitability has since shown signs of recovery.

Key credit concerns include elevated leverage stemming from heavy reliance on short-term borrowings to fund both working capital and capital expenditure needs, alongside debt coverage indicators that, while still weak, have improved from prior-year levels.

On the positive side, VIS acknowledged improved operating margins, recent capacity expansion in the value-added segment, and ongoing energy cost optimization efforts as factors partially offsetting these pressures.

Looking ahead, VIS indicated that sustaining the current ratings will hinge on FASM's ability to strengthen internal cash generation and maintain a steady recovery in profitability against a challenging operating backdrop.

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