VIS reaffirms entity ratings of At-Tahur Ltd

July 14, 2025 (MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of At-Tahur Limited (PSX: PREMA) at ‘A-/A2’ (Single A Minus/A Two).

The medium to long-term entity rating of ‘A-’ reflects good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy.

The short-term rating of ‘A2’ indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors.

Outlook on the assigned rating is ‘Stable’.

Previous rating action was announced on June 10, 2024.

PREMA is a public listed company, engaged in the production and sale of dairy and associated products.

While industry risk was elevated amidst imposition of taxes on food products, the Company’s national presence, characterized by its ‘Prema’ branded dairy product line, experience of sponsors alongside a sizable livestock size, support the business risk.

Topline remained stable in FY24 as higher prices offset lower volumes and decrease in gains from livestock valuation.

In 9MFY25, net revenue stabilized on account of favorable pricing adjustments and stable volumes.

While gross margins contracted in FY24 and 9MFY25 due to increased procurement costs and income taxes, net margin recovered in 9MFY25 driven by reduced financial charges.

Debt servicing remained sustainable in FY24 due to strong cash flow generation, and liquidity and capitalization ratios were maintained at adequate levels.

However, lower cash flows in 9MFY25 impacted debt servicing. Increased reliance on short-term borrowings for working capital needs, led to higher capitalization indicators by end-9MFY25.

Assigned ratings hinge on an increase in dairy product sales, uptick in profit margins, and attainment of projected improvements in debt service coverage ratios and capitalization indicators.

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