January 09, 2024 (MLN) Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of Nishat Mills Limited at AA for long term and A1+ for short term with a Stable outlook forecast, the latest press release issued by PACRA showed.

The ratings reflect the established position of Nishat Mills Limited (“Nishat Mills or the company”) in the country’s competitive textile landscape.

This stems from its remarkable history as the largest export-based, fully integrated unit along with a sizable strategic portfolio on a standalone basis.

The company enjoys prominence in the textile sector attributable to its diverse product range comprising Yarn, Comber Noil, Grey Cloth, Processed Cloth, Made-ups, Garments, Towels, and Bathrobes.

A major portion of topline emanates from export sales as the ccompany has established a stable customer base with several export destinations during the last few years.

This has benefited the topline with attractive foreign exchange gain. A significant chunk of revenue is also captured from the local market.

The company has a forte in the local textile industry catering to the segments of Spinning, Weaving, Dyeing, Garments, Home textile, and Terry.

On a consolidated basis, the investment portfolio, emanating from the company’s implicit Holdco status within the Group, generates a healthy dividend stream, boosting the core profitability.

During 1QFY24, the company’s topline demonstrated positive growth YoY despite the onslaught of macroeconomic challenges.

Due to the consolidated efforts of management on the expense side, the company secured good margins. Deployment of funds in the capital market benefited the bottom line.

The company was able to secure a net profitability of Rs4.5 billon (1QFY23: Rs4.1bn).

The free cash flows from operations (FCFO) illustrate that the company is generating sufficient cash to meet its working capital requirements as evidenced by reduced borrowings.

However, the management of coverages and the working capital cycle remains essential. The company is expected to maintain its strong financial profile, going forward.

The ratings are dependent on the company’s ability to sustain its core margins and profitability.

Preserving low-leveraged capital structure and sound coverages remains imperative.

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Posted on: 2024-01-09T10:33:45+05:00