Press Release
VIS Assigns Initial Entity Ratings to Magna Textile Industries (Pvt) Limited
Karachi, June 12, 2026: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘A-/A2’ (Single A Minus/A Two) to Magna Textile Industries (Pvt) Limited (‘MTIL’ or ‘the Company’). The 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. The 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 is ‘Stable’.
MTIL, a family owned company, was incorporated in 1993 and is engaged in weaving and processing of fabric and home textile made-ups for both local and export markets. The Company operates two manufacturing facilities located in Khurrianwala and Allama Iqbal Industrial City, Faisalabad, Punjab. Both units are vertically integrated and undertake weaving, processing and stitching operations. The registered office is situated in Faisalabad.
The assigned ratings reflect MTIL’s established presence in the textile sector, with operations in weaving and processing of fabric and home textile made ups and a growing focus on the local market amid subdued export demand. The Company’s revenue is supported by higher local sales, although margins at the gross and operating levels are decreasing on a timeline basis, reflecting raw material and energy cost pressures. However, profitability improved on the back of increasing sales, lower finance costs and lower effective taxation.
The liquidity profile remained sound, supported by adequate current ratio and a negative operating cycle. Debt servicing capacity, despite some fluctuations, remained at a comfortable level. The debt profile comprises entirely long-term borrowings, including facilities under SBP refinance schemes, with no reliance on short-term bank borrowings since FY24. Short-term funding is sourced from interest-free support from an associated concern despite availability of unutilized bank lines. On a net debt basis, gearing declined materially by end-1HFY26, underscoring the Company’s enhanced financial flexibility.
Going forward, planned machinery CAPEX is expected to be financed through a debt-equity mix of ~60:40 over the next two years, with anticipated reliance on long-term floating rate borrowings. The ratings are constrained by exposure to raw material price volatility due to high import dependence, increasing energy costs and governance framework. Going forward, the ratings will remain dependent on improvement in margins, maintenance of sound coverages and a low leveraged capital structure.
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://vis.com.pk/docs/VISRatingScales.pdf