Press Release
VIS Assign Initial Entity Ratings to Sitara Hamza (Pvt) Limited
Karachi, March 29, 2024: VIS Credit Rating Company Limited (VIS) assigns initial entity ratings to Sitara Hamza (Pvt) Limited (SHL) of 'BBB/A-3' (Triple BBB/A-Three). Medium to long term rating of 'BBB' indicates adequate credit quality; protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of 'A-3' indicates satisfactory liquidity and other protection factors qualify entities to investment grade. Risk factors are larger and subject to more variation. Nevertheless, timely payment is expected. Outlook on the assigned ratings has been assigned as ‘’Stable’’.
Sitara Hamza (Pvt) Limited, a subsidiary of Sitara Textile Industries Limited (STIL), operates in the domestic textile industry as a family-owned business managed by a father-son duo. Specializing in trading of processed fabrics, SHPL procures grey fabric, processes it through STIL, and sells it to Sitara Studio, other local retail outlets, and whole sellers. Significant clients include Metro Pakistan, Imtiaz Provision Store, and Raja Sahib, among others. Apart from textiles, the Company is also engaged in real estate development including projects like Sitara Sapna City and Sitara Executive.
Assigned ratings incorporates the Company’s adequate business risk profile supported by its extended sponsor support and the overall strength of the group. Operational and financial synergies resulting from SHL’s role as a trading arm for the group also provide assurance to the assigned ratings. Additionally, contribution from its real estate development business further contributes to the ratings.
The ratings also considers the financial risk profile of the Company, buoyed by its stable topline, low gearing, minimal long term debt, and adequate liquidity profile . The assigned ratings further underscores SHPL’s healthy inter-company trade and financial stability where a significant portion of its trade debts is owed to its sister concern.
Going forward, the ratings will remain sensitive to the substantial proportion of payables remaining with the parent company ensuring they do not deteriorate or shift towards the market, coupled with improvement in its financial metrics.
For further information on this ratings announcement, please contact at 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