VIS reaffirms entity ratings of NCL

July 30, 2025 (MLN): VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of Nishat (Chunian) Limited (PSX: NCL) at “A-” for the long term and “A2” for the short term, with a stable outlook, as per the latest press release issued by the agency.

The long-term rating of “A-” indicates good credit quality with adequate protection factors, although the presence of economic risk factors may affect performance over time.

The short-term rating of “A2” reflects a good capacity for timely repayment of financial obligations and sound liquidity.

 Ratings incorporate the medium-risk profile of Pakistan’s textile sector, characterized by cyclical demand patterns, intense domestic and international competition, and exposure to structural inefficiencies. The sector remains highly sensitive to shifts in global and local macroeconomic indicators.

From a financial standpoint, NCL exhibited notable topline growth, a recovery in margins, and improvement in its cash conversion cycle during the review period.

However, an elevated capitalization structure and weak debt coverage metrics remain key areas of concern from a credit risk perspective.

Looking ahead, NCL plans to mobilize a Rs3 billion facility under the Long-Term Financing Facility (LTFF) scheme.

While the planned debt will moderately increase financial obligations, the company’s capitalization and coverage indicators are expected to remain steady, supported by lower expected finance costs and the management’s strategic focus on energy cost efficiencies.

NCL, incorporated in Pakistan, is a public limited company listed on the Pakistan Stock Exchange. It is engaged in the manufacturing and export of yarn, fabrics, and finished textile goods.

Following the transfer of shareholding from Nishat Mills to Mr. Shahzad Saleem, the company continues to pursue operational and financial stability under experienced leadership, with production facilities located in the textile hubs of Kasur and Raiwind.

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