Press Release
VIS Reaffirms Entity Rating of Union Apparel (Private) Limited
Karachi, January 18, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity rating of Union Apparel (Private) Limited (UAPL) at ‘A-/A-2’ (Single A Minus/ A-Two). Long Term 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 ‘A-2’ signifies good certainty of timely payment, liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on December 07, 2021.
Setup in 2016, UAPL is a wholly-owned subsidiary of Union Fabrics (Private) Limited (UFPL), engaged in manufacture and sale of fabric to leading brands in the local market. Assigned rating incorporates moderate business risk profile of the Company wherein risk is related to demand in local market mainly. Single client concentration has witnessed improvement on a timeline basis, however the same is considered to be on the higher side. Rating draws comfort from long-term association of the parent company with reputed brands.
Assessment of financial risk profile reflects improvement in topline led by increased prices. Also, the Company also registered an export sales during FY22. However, amidst current macro-economic situation and market slowdown, revenue growth may remain under pressure, going forward. The Company has registered a favorable uptick in margins due to higher prices in FY22 supporting overall improvement in profitability, however, the same is expected to remain subdued in current year. Liquidity metrics depict deterioration with current ratio stood below 1x. On the back of increased profitability and issuance of shares, equity base of the Company exhibited growth in FY22. However, debt levels also increased notably resulting in elevated capitalization indicators. Going forward, while Company is not planning to mobilize any new debt, rating remains sensitive to improvement in capitalization indicators along with maintenance of margins and profitability.
For further information on this rating announcement, please contact Mr. Amin Hamdani (Ext: 217) or the undersigned (Ext: 207) at (021) 35311861-66 or email at info@vis.com.pk.
Sara Ahmed
Director
Applicable Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.pdf