Press Release
VIS Reaffirms Entity Ratings of Lucky Knits (Private) Limited
Karachi, June 03, 2026: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Lucky Knits (Private) Limited (“LKPL” or “the Company”) at 'A-/A1' (“A minus”/“A One”). 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 'A1' indicates a strong likelihood of timely repayment of short-term obligations with sound excellent liquidity factors. Outlook on the assigned rating is “Stable”. Previous Ratings was announced on April 18, 2025.
LKPL, established in 2004, operates as a partially vertically integrated manufacturer headquartered in Karachi. The Company specializes in the production of knitted apparel, including T-shirts, polo shirts, hoodies and various other garments. LKPL’s manufacturing facilities include knitting, embroidery and stitching enabling it to maintain a diversified product range. Primarily export-oriented, the Company exports its products across four continents: United States (US), Europe, Asia and Oceania.
The assigned ratings derive comfort from the strong sponsor profile of Yunus Brothers Group, which maintains a diversified presence across multiple sectors. In addition, sponsor support remains intact through an associate, Lucky Energy (Private) Limited, and a director, in the form of unsecured, non-interest-bearing loans repayable over a period of 25 years.
Pakistan’s textile exports increased by 7.4% in FY25 to USD 17.8bn, supported by gradual recovery in global demand, while FY26 export performance has remained volatile despite signs of stabilization. The industry continues to shift toward higher value-added segments and sustainability-focused initiatives to enhance competitiveness. However, elevated energy and financing costs, freight volatility, intensified regional competition, the absence of notable rupee depreciation, and the shift toward the normal tax regime continue to pressure margins. Furthermore, the recent 100bps increase in the policy rate may place additional strain on textile manufacturers’ profitability, though the overall outlook remains cautiously optimistic amid gradual demand recovery.
The ratings also incorporate the sponsor’s strategic initiatives undertaken during FY25 and 9MFY26. After achieving higher revenues in FY25 through the execution of break-even and previously loss-making orders aimed at improving cash generation, the sponsor strengthened the management team and enhanced its focus on marketing and business development. This included expanding into and onboarding new high-margin, value-added customers, while simultaneously phasing out relationships with loss-making clients. These measures resulted in a return to profitability, with the Company reporting a net margin of 5.4% after two consecutive years of net losses.
The ratings are further underpinned by a manageable financial risk profile, where equity has begun to recover in 9MFY26, supported by adequate liquidity, satisfactory cash flow generation, and comfortable debt coverage indicators. However, the capitalization profile remains elevated, reflected in high gearing and leverage ratios, despite a marginal improvement during 9MFY26. However, more than one-third of the debt remains interest-free by related parties, while a significant portion of short-term borrowings are at discounted rates. Going forward, sustaining profitability and gradual deleveraging of the balance sheet will remain important.
For further information on this rating announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.