PACRA keeps Mughal Iron & Steel Industries' sukuk rating Steady at 'A+'

April 17, 2024 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained ratings of Mughal Iron & Steel Industries Limited (PSX: MUGHAL) PP Sukuk at ‘A+’ with a stable outlook forecast, latest press release issued by PACRA showed.

The company’s business profile has sustained and improved, over the last few years.

The governance framework is strengthened by the presence of independent oversight on the board.

MUGHAL has a diversified product slate as it operates both in ferrous & non-ferrous segments.

The ferrous segment comprises Billets, Rebars & Girders while the non-ferrous segment mainly comprises Copper related products.

Due to increase in volumes as compared to corresponding period the company reported a remarkable growth of ~47% in its top line, reaching Rs46 billion in 1HFY24.

A distinguished achievement has been the geographical diversification of its revenue streams, particularly through significant contributions from exports of Copper Ingots and granules to China, which accounted for 23% of revenue as at end Dec’23.

This not only bolstered the top line but also ensured a sustained profit stream in the future. However, net margins saw a decline, primarily attributed to high finance costs.

The company's leveraging ratio stood at around 53% in Dec’23.

Apart from banking facilities, the company is also relying on a few privately placed issued instruments to fuel the increase in its WC requirements.

The ratings are dependent upon the MUGHAL’s ability to sustain its healthy business profile amidst exposure to an overall economic slowdown and inflation, herein, effective and prudent management of financial risk indicators remain important.

Moreover, upholding of governance framework is vital.

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