June 23, 2023 (MLN): Pakistan Credit Rating Agency Limited (PACRA) has maintained entity ratings of Engro Corporation Limited (PSX: ENGRO) at "AA+" for the long term and "A1+" for the short term with a stable outlook forecast, a latest press release issued by PACRA showed.
The principal activity of the company is to manage investments in subsidiaries, associates, and joint ventures.
ENGRO’s various investments in diversified sectors have witnessed sustainable growth in terms of financial performance and position, despite the ongoing economic crisis.
Engro Fertilizer (PSX: EFERT) continues to be a prominent player in the fertilizer sector, though the market share declined due to a dip in the overall DAP market.
Engro Eximp, the basmati rice player, is still evolving and is yet to improve its market presence.
Engro Polymer and Chemical (PSX: EPCL) has a fortified position in the local PVC industry with capacity enhancements, Hydrogen Peroxide project; however, import restrictions and global inflation has impacted the net performance.
Engro Enfrashare's telecom tower business is booming as the company managed to grab considerable market share, through equity injection, and plans to double it, going forward.
The company plans to enhance its footing in the petrochemical vertical by setting up a polypropylene facility.
Moreover, it may expand its exposure in the renewable energy and LNG sectors.
ENGRO continues to enjoy consistent dividend income from its subsidiaries. EFERT announced slightly lower dividends.
While, EPCL shared substantial dividends during CY22, which was further supported by a dividend share from Engro Energy and Engro Elengy.
Thus, compensating no dividend income from Engro Connect and FrieslandCampina.
Engro Vopak remained a cash producer, as well.
The company has a low-leveraged capital structure with very strong coverages and liquidity signifying its robust financial risk profile.
The ability to limit debt levels to 50% of its equity at the group level provides comfort to the entity's ratings.
Additionally, ENGRO’s strong organizational structure, designed to control the strategic direction of its subsidiaries, and strong governance framework.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion amidst the prevailing economic environment.
Sustainability in the performance of subsidiaries, stable dividends, and effective management of financial profile is important.
Meanwhile, effective utilization of liquid assets to enhance the investment portfolio is critical.
Copyright Mettis Link News
Posted on: 2023-06-23T15:44:09+05:00
