Press Release

VIS Reaffirms Entity Ratings of EMCO Industries Limited

Karachi, May 23, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of EMCO Industries Limited (‘EMCO or ‘the Company’) at ‘A-/A2’ (Single A minus/A two). 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 'A2' indicates good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 05, 2023.

EMCO was incorporated in 1954, by the name of Electric Equipment Manufacturing Company (Private) Limited. Later, it was converted into a public company in 1983, and its name was changed to EMCO Industries Limited. The Company is involved in the production and sale of high/low porcelain-based insulators, switchgears, and substation products used in power sector. EMCO’s head office and production facilities are located in Lahore.

Ratings take into account elevated business risk during the review period mainly due to lower demand from DISCOs owing to budgetary delays and reprofiling of power sector. However, as part of its business strategy, the Company has started focusing on its export and product diversification. Ratings also factor in satisfactory liquidity and cashflow coverage profile of the Company in FY24 while capitalization indicators largely remain in the same range and are considered manageable from a ratings perspective. Nonetheless, topline declined as stressed profitability and higher obligations led to weakened debt servicing during 9MFY25. However, an enhancement in sales and profitability was observed in 3QFY25. This positive trend is forecasted to continue, potentially resulting in a satisfactory improvement in debt servicing of the Company in the upcoming year. Ratings will remain dependent on further improvement in sales, profitability and debt coverages with the maintenance of liquidity and capitalization indicators.

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

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright May 23, 2025 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.