VIS reaffirms Interloop’s ‘AA-/A1’ ratings

MG News | August 05, 2025 at 04:55 PM GMT+05:00
August 05, 2025 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Interloop Limited (PSX: ILP) at ‘AA-/A1’ (Double A minus/A one).
Medium to long term rating
of ‘AA-’ indicates High credit quality; Protection factors are strong. Risk is
modest but may vary slightly from time to time because of economic conditions.
Short term rating of 'A1'
indicates strong likelihood of timely repayment of short-term obligations with
excellent liquidity factors. Outlook on the assigned ratings remain ‘Stable’.
Previous rating action was announced on July 18, 2024.
Interloop Limited is a vertically integrated
textile composite specializing in hosiery, denim, knitted apparel, seamless
activewear, and yarns, supported by a well-diversified export base and
long-standing relationships with major international retailers.
The Company employs 37,000+
individuals from 15 nationalities, operating across 6 countries.
This includes an extensive
industrial infrastructure base in Pakistan, an associate manufacturing facility
in Sri Lanka, a manufacturing facility and sourcing office in China, and
marketing services offices in USA, Europe and Japan.
The Company’s registered
office is located at 15-A Peoples Colony No. 1, Faisalabad.
The assigned rating reflects ILP’s strong market
position, integrated operations, and stable revenue scale. The Company is
actively pursuing capacity expansion and product diversification, particularly
in the denim and apparel segments.
While the hosiery division
continues to generate stable earnings, consolidated profitability has been
impacted by margin compression in the apparel segment, which remains in its
ramp-up phase.
Ongoing capital expenditure
has kept capitalization metrics constrained, although gradual improvements in
gearing are evident.
Liquidity remains adequate;
however, cash flow-based coverage indicators have weakened due to reduced
profitability.
The rating is supported by management’s focus on
operational efficiency, particularly in apparel segment, its commitment to
capping debt levels, and long-term cost savings through sustainability
initiatives, including the planned expansion of solar energy capacity.
However, external risks
persist, most notably the potential impact of fluctuations in global cotton
prices and changes in U.S. tariff policies, will remain a key challenge.
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