December 31, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Engro Corporation Limited at ‘AA+’ for long-term and ‘A1+’ for short-term, with a stable outlook forecast.
According to PACRA, the ratings reflect Engro Corporation's very strong risk profile. The Holding Company's diverse pool of investments previously under its three strategic pillars i.e. fertilizer, consumer goods and energy have been re-aligned to four strategic pillars i.e. agri-solutions, consumer, energy infrastructure and petrochemicals.
Significant liquid resources post divestment of sizable stake in EFoods, EFert and Elengy Terminal allow Engro Corp to explore various investment avenues.
Engro Corporation’s existing portfolio has shown significant growth. While, EFert and EVopak continue as stable cash producers, EPolymer and Elengy have also joined the ranks. This has added the much needed diversity to the Holding Company's revenue streams which would further strengthen with increase in dividends.
Of late, EPolymer has made a major turnaround owing to fundamental changes in the international industry dynamics supplemented by operational efficiencies. Given the strong demand in the local markets and the company’s fortified position in the PVC industry, EPolymer is expected to reap full benefits of its planned expansion. Engro Corp has sizeable investment in energy chain through Engro Energy. Here, coal mining along with coal based power plant are the key projects.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion. Sustainability in the performance of subsidiaries as envisaged along with effective management of financial profile on a group-wide basis remains important.
