VIS reaffirms entity ratings of Naveena Exports Limited

July 23,2025(MLN): VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Naveena Exports Limited (NEL) at ‘A/A1’ (Single A/A One).

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 ‘A1’ indicates strong likelihood of timely repayment of short-term obligations with excellent short-term liquidity factors.

Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on June 04, 2024.

NEL, established in 1989, is primarily engaged in the export of yarn and denim fabric.

The sponsor’s experience in textile sector is taken into considerations while the Company has also established its presence internationally.

Business risk remains high in textile sector due to increased production costs and strong regional competition.

In FY24, NEL witnessed record sales on the back of favorable pricing and stable demand.

However, profit margins contracted due to higher fuel costs and financial charges.

Subsequently, given lower profitability, cash flows declined exerting pressure on debt service ratios.

Liquidity factors remained adequate, although cash conversion cycle remains elevated. Moreover, the Company’s capitalization indicators remained manageable.

To uphold the assigned ratings, recovery in cash flow generation to augment debt coverages will be a key rating driver.

Moreover, cost-control efforts to recover margins, while keeping low reliance on borrowings to maintain a conservative capitalization profile will remain important from the ratings perspective.

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