Press Release
VIS Reaffirms Entity Ratings of Thal Limited
Karachi, December 19, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Thal Limited (‘THAL’ or ‘the Company’) at ‘AA/A1+’ (Double A/A One Plus). Medium to long-term rating of ‘AA’ reflects high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of ‘A1+’ signifies strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous rating action was announced on December 18, 2024.
Thal is a diversified national conglomerate with operations spanning multiple business segments. The Company’s portfolio includes engineering division, encompassing thermal & engine components, as well as building materials and allied products segment, comprising of jute, packaging and laminates.
The reaffirmation of Thal Limited’s ratings reflects the Company’s diversified business profile, stable financial risk metrics, strong liquidity position and backing of resourceful group. The ratings continue to draw comfort from Thal’s presence across multiple segments – Engineering, Jute, Packaging and Laminates – which provides resilience against cyclical pressures in any single line of business. Despite the contraction in the Building Materials & Allied Products segment following the suspension of government wheat procurement, overall operational stability was maintained, supported by robust growth in the Engineering division and ongoing strategic diversification initiatives, including export development and expansion within the Packaging segment.
Profitability remains underpinned by recurring investment income, which continues to provide a buffer against volatility in core manufacturing margins. While gross margins remained broadly stable in FY25, the Company’s reliance on non-operating income remains a key contributor to bottom-line performance. Despite slight decline in 1QFY26 earnings due to timing of dividend income and higher taxes the Company’s underlying debt-servicing capacity remains sound. Thal maintains a conservative capital structure, supported by low leverage, minimal gearing, and a favorable debt mix comprising concessional and low-spread bank facilities. Liquidity remains robust, underpinned by sizeable short-term investments, strong cash balances, and an improving operating cycle.
Going forward, the ratings will remain sensitive to the Company’s ability to sustain gross margins and evolving sector dynamics, particularly in the automotive value chain and building material segment. Continued progress on diversification into non-automotive engineering applications, aftermarket expansion, and export growth will be important for mitigating cyclicality and supporting long-term earnings stability.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf