Press Release
VIS Reaffirms Entity Ratings of Sadaqat Limited
Karachi, March 6, 2026: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Sadaqat Limited at ‘A/A2’ (Single A/A Two). The medium-to long-term rating of ‘A’ indicates good credit quality; protection factors are adequate. Risk factors may vary with changes in economic conditions. The short-term rating of ‘A2’ indicates a good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating remains ‘Stable’. Previous rating action was announced on December 19, 2024.
Sadaqat Limited (‘SL’ or ‘the Company’) is a vertically integrated textile manufacturer incorporated in 1987. The Company’s operations span spinning, weaving, knitting, processing, stitching, and exports of value-added garments and home textiles. Its head office and production facilities are based in Faisalabad.
Ratings take into account the experience of sponsors and well-established footprint of the Company in the textile sector amidst elevated business risk for textile exporters due to declining domestic cotton availability, reliance on imported raw material, high energy costs, and policy inconsistencies affecting yarn demand, alongside potential pressures from global tariffs. Reaffirmation of ratings reflects SL’s resilience amidst these pressures. In FY25, the Company commenced spinning operations, completing vertical integration and enabling a shift toward higher-margin products. Net sales recorded modest growth during the year, due to disrupted order deliveries toward year-end despite the addition of some new customers. Gross margins remained stable, supported by export demand and efficiency gains from the Company’s biomass and solar energy initiatives; however, net margins came under pressure due to higher operating costs and an increased tax burden. Cash flows remained steady, improving debt coverage indicators. The addition of spinning operations has led to lengthening of working capital cycle and corresponding funding requirements.
Going forward, ratings will be sensitive to the Company’s ability to drive revenue and profitability growth amidst evolving global trade agreements and tariff structures. Sustained deleveraging and improvement in liquidity metrics will remain important for ratings.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk
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