VIS reaffirms entity ratings of Al-Ghazi Tractors Limited

October 02, 2026 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Al-Ghazi Tractors Limited (‘AGTL’ or ‘the Company’) at ‘A+/A1’ (Single A Plus/A One). Medium to long term rating of ‘A+’ indicates Good credit quality; Protection factors are adequate.

Risk factors may vary with possible changes in the economy. Short term rating of 'A1' indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors; outlook on the assigned rating remains ‘Stable’.

Previous rating action was announced on October 17, 2025.AGTL is a publicly listed agricultural machinery manufacturer incorporated in June 1983.

The Company is principally engaged in the assembly and sale of agricultural tractors, implements, and spare parts. In 1991, the Al-Futtaim Group acquired a controlling interest in AGTL and remains the majority shareholder.

AGTL has a technical collaboration agreement with CNH Industrial Italia S.p.A. for the assembly and manufacture of New Holland tractors.

The Company’s registered and head offices are located in Lahore with a liaison office in Karachi. Its tractor assembly facility, located at Dera Ghazi Khan, has an installed production capacity of 30,000 units per annum.

AGTL operates marketing offices in Lahore, Multan, Islamabad, and Sukkur, and supports its nationwide operations through a well-established dealership network of 104 dealers, with a significant concentration in Punjab.

The reaffirmation of AGTL’s ratings reflects the Company's low financial risk profile, underpinned by a healthy balance sheet and prudent leverage metrics, against the elevated business risk stemming from the Company's declining market share over the past four years.

The erosion in market position has been driven by a shift in preference toward higher horsepower tractors, volatile market conditions arising from weak farm economics and broader macro-economic pressures affecting the agriculture sector.

The ratings are supported by the strong profiles of the sponsors, Al-Futtaim Group and CNH Industrial.

Ongoing IT initiatives aimed at improving operational efficiency and enhancing coordination with internal and external stakeholders also support the reaffirmation of the ratings.

Profitability weakened in CY25 due to lower net sales from lower demand and rising operating costs. However, capitalization and debt coverage metrics remained strong due to the repayment of long-term borrowings at end-CY25 through savings in dividend payouts.

Financial metrics improved modestly in 1QCY26, driven by higher net sales and better margins, amid sector policy impetus, including Wheat Package via the Kisan Card, and a two-tranche Green Tractor Scheme for 19,500 subsidized tractors in Punjab.

Going forward, the ratings will depend on the Company improving its market share, recovering profitability, and maintaining low financial risk profile.

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