VIS maintains entity ratings of Bunny’s Ltd

December 31, 2024 (MLN): VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Bunny’s Limited (PSX: BNL) at ‘A-/A2’ (Single A Minus/A Two).

The medium to long-term rating of ‘A-’ denotes good credit quality; protection factors are adequate.

Risk factors may vary with possible changes in the economy.

The short-term rating of ‘A2’ suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors.

Outlook on the assigned rating has been revised from ‘Stable’ to ‘Negative’.

The previous rating action was announced on April 06, 2023.

BL is a renowned player in the bakery and food products sector, operating within the Fast-Moving Consumer Goods (FMCG) market in Lahore and central Punjab.

Additionally, as a publicly listed entity, BL is required to adhere to Corporate Governance regulations for listed companies, which have also been taken into account in the assigned ratings.

The Company’s head office and production facility are situated in Lahore.

Ratings are underpinned by the Company’s moderate business risk profile, owing to presence in the FMCG market and established brand name.

BL maintains around 40% market share in Lahore and surrounding areas, with strong relationships with notable market participants, facilitating the distribution of BL-produced Nimko.

Revenue from the sale of bakery and snacks represent 85% & 15% of the total revenue of the Company, respectively.

During the outgoing year, capacity utilization increased slightly on account of stable demand.

Despite experiencing an uptick in revenue attributable to both higher sales volumes and prices, a contraction in margins culminated in a net loss for BL in FY24, reverting a trend from the preceding years characterized by consistent profitability.

The revision in the ratings outlook reflects weakened debt coverage profile and stress on liquidity profile in the outgoing year.

Moreover, equity base also eroded due to losses however capitalization indicators remained largely intact.

Looking forward, improvement in profitability, debt servicing coverage and liquidity profile will remain crucial from ratings perspective.

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