Press Release
VIS Maintains Entity Ratings of Indus Home Limited
Karachi, August 07, 2025: VIS Credit Rating Company Limited (VIS) maintains the entity ratings of ‘A-/A2’ (Single A Minus/A Two) for Indus Home Limited. Long-term entity rating of ‘A-’ reflects 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 ratings is revised from ‘Stable’ to ‘Negative’. Previous rating action was announced on August 08, 2024.
Indus Home Limited (‘IHL’ or ‘the Company’), established in 2006, is a wholly owned subsidiary of Indus Dyeing & Manufacturing Co. Limited (IDMC), part of the Indus Group of Companies. IHL manufactures and exports greige and finished terry cloth and cotton yarn through vertically integrated operations including spinning, weaving, dyeing and processing with an emphasis on export sales. The Indus Group, which apart from textiles also has interests in wind energy, has an annual turnover of approximately PKR 173 billion.
Pakistan’s textile sector, contributing ~55% of exports and 8.5% of GDP in 9MFY25, remains vital despite facing challenges. Domestic cotton production declined sharply, increasing reliance on imports, which also currently offer cost and quality benefits. Exports rose 7.9% YoY to USD 17.9 billion, driven by value-added segments. New policies support local spinning but raise input costs of textile exports. External pressures, including US tariffs and rising local costs are squeezing margins. However, firms investing in renewable energy and benefitting from rupee depreciation may offset some of these challenges and maintain competitiveness.
The assigned ratings reflect the sponsor strength of the parent company, IDMC, as well as consistent topline growth over the years. However, profitability indicators declined in FY24 and remained under pressure in 9MFY25 due to a shift in the sales mix and rising cost pressures. The ratings also factor in the Company’s financial risk profile with capital expenditure for the newly launched synthetic segment, primarily funded through long-term borrowings, leading to elevated capitalization indicators.
The liquidity profile remained adequate, although the cash conversion cycle lengthened during 9MFY25. Coverages remained weak with annualized DSCR falling below 1x as at 9MFY25. Going forward, performance of the new synthetic segment as well as improved profitability in existing business lines are the key factors expected to impact coverage profile.
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