Mughal Iron & Steel Industries’ ongoing expansion projects to increase its market presence

December 19, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Mughal Iron & Steel Industries Limited at ‘A-’ for long-term and ‘A2’ for short-term, with a positive outlook forecast.

The press release by PACRA suggests that the ratings take strength from strong brand value of Mughal Steel in the local industry. The company has attained formidable market share. Demand from retail segment is also earmarked by the management as future growth driver.

The ongoing expansion projects of 'Additional power capacity' and 'replacement of BMR mill' etc. will enable Mughal to increase its market presence, the report added.

Mughal unlike south players have to incur freight cost – that explains its differential in margins. The ratings incorporate Mughal’s adequate financial risk profile which has sustained over the years.

Going forward, owing to debt driven expansion, the leveraging is bound to increase; however expected to be comfortably managed through healthy cash flows.

The ratings are dependent upon the company’s ability to sustain its business profile amidst strong competition, herein, effective and prudent management of financial risk indicators remain important. Moreover, strengthening of governance framework is vital.

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