Pakistan Credit Rating Agency Limited maintains entity ratings of Nishat Mills

Lahore, September 28, 2016 (PPI-OT): The Pakistan Credit Rating Agency Limited (PACRA) has maintained the long-term and short-term entity ratings of Nishat Mills Limited (NML) at “AA” (Double A) and “A1+” (A One plus), respectively. The ratings denote a very low expectation of credit risk emanating from a very strong capacity for timely payment of financial commitments.

The ratings reflect the diversity of Nishat Mills’ (NML) underlying businesses, along with a conservative capital structure. This emanates from its implicit holdco structure within Nishat Group (NG). This helps in managing the impact of adversities in any industry, particularly textile business, on the overall profile of NML. NML’s significant as well as diverse strategic investment portfolio is generating a regular and growing dividend stream in addition to potential of capital appreciation.

NML has an established business profile in textile industry. The company continues to maintain its position as a sizeable, export-oriented composite unit in the country’s textile sector. NML has adequate diversification levels, in terms of both geography and customer base. After having a suppressed year, operational performance has shown some recovery in FY16 and onwards.

This is likely to continue on the back of gradual improvement in textile sector dynamics, depicted from (i) relatively high domestic cotton production level for FY17, (ii) availability of low cost power fuel (RLNG), and iii) stability in financial indicators. Going forward, the management intends to further augment its size, capitalizing on capacities enhancements. The improvement in business performance has uplifted the financial risk profile of the entity.

The ratings continue to depend on the management’s ability to maintain its business profile while sustaining its market position. Maintaining positive trend in business margins remains important. Moreover, a formal holding company structure to monitor a large investment portfolio would bring structural efficiencies with focused decision making.

For more information, contact:
Hammad Rashid
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425
Email: hammad.rashid@pacra.com
Web: www.pacra.com