Press Release

VIS Reaffirms Ratings of Allied Rental Modaraba

Karachi, December 26, 2019: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Allied Rental Modaraba (ARM) at ‘A+/A-1’ (Single A Plus/A-One). The long term rating of ‘A+’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short term rating of ‘A-1’ depicts high certainty of timely payment where liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 31, 2018.

The assigned ratings are underpinned by sound financial profile of ARM emanating from manageable leverage, adequate liquidity, and sustained profitability on timeline basis. In the backdrop of improving power situation in the country, the management’s business strategy envisages diversification from power business towards logistics and construction machinery segments. Accordingly, ratings take into account the significant efforts required by the company to achieve diversification and topline growth amid strained economic environment and high interest rate scenario of the country. Given that majority expansion in operating assets for business expansion has already been undertaken, debt mobilization is projected to be limited going forward. ARM, a wholly owned subsidiary of Allied Engineering & Services (Pvt) Limited (AESL), is the market leader in generator rental business. Support from AESL, the authorized dealer of Caterpillar (CAT) products in Pakistan, remains a key rating factor.

The ratings are dependent on the management’s ability to sustain its sound financial profile and achieve envisaged revenue growth through diversification, while ensuring growth in margins and profitability. Deterioration in revenues and margins, leading to erosion in profitability, and or/coverages will have negative impact on the ratings.

For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Muhammad Ibad Desmukh (Ext: 205) at 35311861-70 (10 lines) or fax to 35311873.



Javed Callea
Advisor

Applicable Rating Criteria: Non-Bank Financial Companies (October 2017)
http://vis.com.pk/kc-meth.aspx

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 December 26, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.