Press Release
VIS Reaffirms Entity Rating of Towellers Limited
Karachi, May 18, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Towellers Limited (‘TOWL’ or the ‘Company’) at ‘A/A1’ (Single A/ A one). Medium to long term rating of 'A' indicates Good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A1' indicates Strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on assigned ratings remains ‘Stable’. Previous Rating action was announced on March 28, 2025.
Incorporated in 1973, Towellers Limited is a public limited company listed at the Pakistan Stock Exchange. TOWL operates vertically integrated textile mills that encompass weaving, dyeing and sewing operations. The Company specializes in manufacturing and export of home textiles and garments, with key export markets in Europe and the USA.
The assigned ratings reflect the medium business risk profile of Pakistan’s textile sector, which continues to face structural challenges including declining domestic cotton production, elevated energy tariffs, and rising labor costs. While textile exports benefit from sustained demand in value-added segments and relatively favorable tariff dynamics especially in US, the sector remains exposed to intensifying regional competition, policy changes, and input cost volatility, all of which constrain profitability and growth.
TOWL’s operational performance remains under strain, with stagnant topline growth in FY25 and a declining gross margin amid heightened competition, rising costs, and limited pricing flexibility in export markets. Despite these challenges, the Company continues to demonstrate a manageable financial risk profile, underpinned by a conservative capitalization structure and minimal reliance on debt. Borrowings are largely short-term in nature and linked to export financing requirements.
Liquidity and coverage indicators remain satisfactory, supported by a strong current ratio and adequate liquidity buffer in the form of cash and short-term investments. Although Funds from Operations have declined materially due to lower profitability, coverage metrics including DSCR and short-term debt coverage remain at comfortable levels, supported by limited debt obligations.
Going forward, the rating remains constrained by persistent margin pressure, high customer concentration, and exposure to evolving global trade dynamics, which may continue to weigh on the Company’s earnings stability and growth trajectory.
For further information on this ratings announcement, please contact on 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
VIS 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