PACRA assigns ‘AA’ rating to Yunus Textile

December 10, 2024 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has assigned a long-term rating of ‘AA’ and a short-term rating of 'A1+' to Yunus Textile Mills Limited (YTML), according to the latest press release issued by PACRA.

YTML received a rating upgrade due to its excellent performance, highlighted by record-high profits that have enhanced its business risk profile.

While many large textile players struggled to sustain margins, YTML excelled in its core business.

It further enhanced its performance through additional income streams, showcasing resilience in a competitive market.

The company utilizes advanced production mechanisms and computerized processes, supported by ongoing BMR and expansion, to meet the high-quality standards of top international brands.

A significant portion of the Company’s revenue is parked with export sales (FY24: RS75.8bln; FY23: 66.2bln) with a contribution of 95.6% on a standalone basis. In volumetric terms, base. 

The installation of ~33.85-megawatt solar and wind turbine has comforted the GP margin via optimizing escalated energy cost risk. 

The Company is in the process of installing a ~9.60 MW wind turbine, which is expected to become operational by the end of February 2025.

However, dividend income of RS4.0bln as of FY24 from a large strategic investment book has augmented the profitability matrix of the Company. 

The management is mindful of coping with the financial cost risk and reduces the size of its borrowing book by offloading its short-term debt.

The Company’s bottom line illustrated a sizeable improvement reaching RS16.0bln (FY23: RS 14.0bln). 

The Company fuels its working capital requirements through internally generated cash flows which has beefed up the coverage.

The financial risk profile is considered strong, with a well-managed working capital cycle coupled with a low-leverage capital structure demonstrating ample borrowing capacity.

Going forward, the management seeks to drive further growth by preserving its core operations and maintaining its steadfast client ties.

The company has a strong financial risk profile, with a well-managed working capital cycle and a low-leverage capital structure, indicating significant borrowing capacity.

Looking ahead, management aims to drive growth by focusing on core operations and maintaining strong client relationships.

The ratings are dependent upon the intact business operations under the current economic conditions and draw comfort from the sponsor’s profile.

Improvement in margins, maintenance of coverages, and cashflows at an optimal level while expanding business volumes remains critical.

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