Press Release

VIS Maintains Entity Ratings of BBJ Pipe Industries Limited

Karachi, January 2, 2024: VIS Credit Rating Company Limited maintains entity ratings of BBJ Pipe Industries Limited (‘BBJP’ or ‘the Company’) to 'BBB/A-2' (Triple-B’/ ‘A-Two’). Medium to long term rating of 'BBB' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of 'A-2' indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned rating have been revised from ‘Rating Watch – Developing’ to ‘Stable’. Previous Rating action was announced on March 31, 2023.
BBJ Pipe Industries Limited was founded in 1991 and was converted into a public limited company in 2013. The Company is a family-owned business situated in Lahore's Chunian Industrial Estate, with additional offices in Lahore and Islamabad. BBJP manufactures steel and polyethylene pipes and serves diverse market needs through four manufacturing units. The Company is part of the BBJ Group, which also includes BBJ Steel Limited (BBJS), a former division now operating as a wholly owned subsidiary since FY19.
Ratings incorporate the medium to high business risk profile of BBJP within the steel pipes & tubes industry. This sector is sensitive to economic cyclicality and exposed to fluctuations in exchange rates and international commodity prices. The industry faces challenges such as low-capacity utilization, revenue and profitability issues, taxation challenges, higher financing costs, rupee depreciation, and increases in gas and electricity prices.
Change in outlook is supported by the Company's financial risk profile, which included BBJP’s ability to report a growth in its topline given economic challenges. Furthermore, higher volumes, effective price adjustments, and inventory gains contributed to improved profitability performance. Additionally, capitalization metrics have strengthened, marked by a decrease in short-term debt drawdown due to reduced working capital requirements, supported by a shorter cash conversion cycle. The Company maintains an adequate coverage and liquidity profile; however, BBJP’s coverage profile did experience deterioration during the period under review.
Going forward ratings will remain sensitive to the Company’s ability to maintain its profitability, capitalization, liquidity and coverage profile commensurate with assigned ratings.
For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 210) or the undersigned (Ext: 207) at 021-35311861-64 or email at info@vis.com.pk.





Sara Ahmed
Director


Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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