Press Release
VIS Reaffirms Entity Ratings of Rajby Textiles (Pvt) Limited
Karachi, September 25, 2025: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Rajby Textiles (Pvt.) Limited (‘RTPL’ 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 a 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 September 3, 2024.
Ratings take into account sponsor profile of RTPL, one of the leading players in the textile sector. RTPL specializes in denim fabric production, with operations including weaving and finishing. The Company’s head office and manufacturing facility are located in Karachi.
Assigned ratings reflect higher business risk encountered by textile exporters emanating from declining domestic cotton production, reliance on costly imports, and persistent high energy costs and new taxes, all having adverse impact on profit margins across the sector. Furthermore, the devastation of cotton crops caused by floods in recent months could further elevate supply chain and cost-side challenges for textile companies in Pakistan.
RTPL has shown some resilience, with net sales notably increasing in FY25 on account of improvement in demand. However, gross margin declined as the Company was not able to fully transfer costs onto customers. Nevertheless, net profitability increased on the back of higher gross profit and other income amid lower finance costs. Management anticipates that revenue and profitability will stabilize in the ongoing year, amid demand growth, though margins will remain suppressed due to impact of potential increases in production costs, particularly due to cotton price volatility. The Company’s plans to venture into garments manufacturing which will be financed through a combination of debt and equity. Capitalization indicators could therefore increase by end-FY26. Sustaining positive momentum in topline, recovery in margins, maintaining adequate debt servicing ratios and managing the impact of higher debt burden going forward, will be important from the ratings perspective.
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