VIS reaffirms entity ratings of Shahtaj Textile Mills

News Image

MG News | November 28, 2023 at 10:55 AM GMT+05:00

0:00

November 28, 2023 (MLN): The VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Shahtaj Textile Mills Limited (PSX: SZTM) at ‘A-’ for long-term and ‘A-2’ for short term with a stable future outlook, the latest press release issued by VIS showed.

A medium to long-term rating of 'A-' indicates good credit quality; Protection factors are adequate.

While the short-term rating of 'A-2' indicates good certainty of timely payment.

The previous rating action was announced on November 23, 2022.

Shahtaj Textile Limited (SZTM), is a publicly listed company headquartered in Karachi.

The company specializes in the production of grey fabric. Employing over 480 employees, SZTM operates a manufacturing unit in Kasur.

The energy requirement is met by gas generators, a diesel backup, and grid supply by WAPDA, and plans to integrate a 1MW solar plant to contribute to their environmental initiatives.

The business risk environment of the local textile sector remains elevated amid weak macroeconomic environment, high-interest rates, inflationary pressures, rising raw material costs, an on-going energy crisis, and a global slump in demand.

Resultantly, Pakistan’s textile exports witnessed a 10% YoY decline to $16.7 billion (FY22: $18.5bn).

SZTM’s assigned ratings are supported by over three decades long operational history, strong sponsor support and a limited reliance on imported yarn.

Ratings also take note of elevated client concentration risk and subdued sales growth during the review period.

Rating factor in revenue growth of 9% in FY23 primarily due to increased volumes, surpassing the Rs8bN mark.

However, in 1QFY24 a 16% YOY decrease is observed in net sales.

The top ten clients make up approximately 80% of the entire revenue, indicating a significant concentration risk.

In addition, ratings take account of the weakening of cash flow coverage metrics, with DSCR decreasing on a timeline basis.

The company maintains stable gearing and leverage ratios, although the planned installation of a solar power plant could introduce new long-term debt, potentially affecting capitalization.

Going forward, ratings are dependent on improving cash flow coverage metrics and maintaining capitalization.

Copyright Mettis Link News

Related News

Name Price/Vol %Chg/NChg
KSE100 171,115.82
431.76M
-1.03%
-1778.46
ALLSHR 102,630.82
1,022.40M
-0.72%
-743.98
KSE30 51,478.54
123.81M
-1.23%
-641.56
KMI30 245,731.79
184.52M
-1.22%
-3035.83
KMIALLSHR 66,650.32
595.11M
-0.81%
-541.20
BKTi 47,279.59
41.00M
-1.38%
-660.98
OGTi 35,704.94
10.73M
-1.65%
-598.06
Symbol Bid/Ask High/Low
Name Last High/Low Chg/%Chg
BITCOIN FUTURES 80,390.00 0.00
0.00
5.00
0.01%
BRENT CRUDE 100.25 102.92
99.55
0.19
0.19%
RICHARDS BAY COAL MONTHLY 110.00 0.00
0.00
-3.30
-2.91%
ROTTERDAM COAL MONTHLY 107.10 107.75
106.20
2.10
2.00%
USD RBD PALM OLEIN 1,191.50 1,191.50
1,191.50
0.00
0.00%
CRUDE OIL - WTI 94.68 0.00
0.00
-0.74
-0.78%
SUGAR #11 WORLD 14.69 14.75
14.46
0.15
1.03%

Chart of the Day


Latest News
May 10, 2026 at 05:50 PM GMT+05:00

RDA hits record $321m in April


May 10, 2026 at 04:27 PM GMT+05:00

New airline South Air brings first aircraft to Pakistan


May 10, 2026 at 09:53 AM GMT+05:00

RDA inlows stay strong amid higher oil bill


May 10, 2026 at 09:33 AM GMT+05:00

Pakistan rushes for spot LNG amid Hormuz disruption



Top 5 things to watch in this week

Pakistan Stock Movers
Name Last Chg/%Chg
Name Last Chg/%Chg