January 16, 2019 (MLN): Pakistan Credit Rating Agency has assigned initial entity ratings to E-Vision Manufacturing Limited at ‘BBB’ for long-term and ‘A2’ for short-term, with a stable outlook forecast.
The ratings reflect adequate business profile of E-Vision Manufacturing Limited and its established position in the regenerated polyester staple fiber industry. The company has identified a niche in the textile industry by manufacturing fine white, black and green regenerated polyester staple fiber using post-consumed polyethylene terephthalate (PET) bottles.
The company’s topline, though small in size, has displayed rising trend. Recent venture into export market is expected to grow revenues. Margins have remained volatile owing to fluctuations in global oil prices, a key factor impacting product price. Impact of new entrants and seasonal constraints limit availability of raw material, posing a challenge to the company’s working capital management and optimal capacity utilization.
Margins have shown improvement in CY18 on the back of better procurement of raw material through imports and local market. Bottom-line remains small and has shown an unstable trend.
The ratings are dependent on anticipated growth in topline and stability of margins. Sustained high coverages and maintaining leveraging at low levels remains critical.
Going forward, better governance framework will be ratings positive. Prolonged downturn in margins and/or coverages will adversely impact ratings.
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