PACRA Maintains Entity Ratings of Nishat Mills Ltd at AA/A1+

November 16, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has maintained entity ratings of Nishat Mills Limited at ‘AA’ for long term and ‘A1+’ for short term. The outlook forecast for the ratings is ‘stable’.

According to the rating agency, the ratings reflect diversity of Nishat Mills’ underlying businesses, along with a conservative capital structure.

The ratings are dependent on the company's ability to sustain its profitability. Low leveraged capital structure provides room for expansion; should be managed prudently.

This emanates from its implicit holdco structure within Nishat Group, providing resilience to adversities in underlying sectors, particularly textile, while upholding the overall profile of Nishat Mills.

Nishat Mills is one of the market leaders in textile industry, maintaining a sizeable, export-oriented composite unit in the country's textile sector. Superior profile is characterized by requisite diversification, in terms of both geography and customer base.

However, re-imposition of custom duties and sales tax on cotton & yarn imports, coupled with inflated interest rates has stretched the textile industry.

Meanwhile, the rupee devaluation has provided a requisite breather to the company to sustain its business margins.

The management is focusing on capitalizing enhanced facilities in order to achieve overall cost efficiencies.

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