Press Release
VIS Reaffirms Entity Ratings of Mannan Shahid Forgings Limited
Karachi, June 13, 2025: VIS Credit Rating Company Limited (VIS) reaffirms entity ratings of Mannan Shahid Forgings Limited at ‘A/A2’ (Single A /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 remain ‘Stable’. Previous rating action was announced on May 06, 2024.
Mannan Shahid Forgings Limited (‘MSFL’ or ‘the Company’) was incorporated as a private limited company in 1989. It was converted into an unquoted public limited company in 2005. The Company’s primary operations pertain to the manufacturing of forged, heat-treated, and machined components for passenger cars & trucks, agricultural tractors, motorcycles, fifth wheels and industrial conveyer system. During the current year, MSFL’s parent company, Vally Forge (Pvt) Limited (VFPL) has been merged with and into MSFL. VFPL was initially established as a special purpose vehicle to facilitate the acquisition of MSFL in 2018 from its previous shareholders. Therefore, following the completion of this merger, there has been no material impact on the financials or operational structure of MSFL.
The assigned ratings reflect MSFL's moderate business risk profile, which is influenced by the inherent cyclicality of the Forging sector catering to automotive industry, fluctuations in imported raw material prices, and fluctuations in exchange rates. However, the same is mitigated to some extent as more than 75% of the Company’s sales is export-oriented. Further, the changes in global economic drivers specifically related to European countries impact the Company’s business.
The ratings also incorporate MSFL's financial risk profile, which is underpinned by an adequate capitalization structure, aligned with the Company’s conservative approach of debt mobilization. For FY24, MSFL reported growth in both topline and gross margins, driven by its focus on profitable clients and reduction in freight costs. The liquidity profile remains strong, supported by a high current ratio and a largely stable cash conversion cycle, while coverage ratios have also remained sound.
Profitability profile has been impacted during the on-going year amid lower sales. The management expects growth in FY26 on the back of higher demand from European customers. The ratings will remain dependent upon growth in profitability along with maintenance of low gearing and healthy coverages.
For further information on this ratings announcement, please contact on 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