Press Release
VIS Finalizes Short-Term Sukuk 2 (STS-2) Rating of Mahmood Textile Mills Limited
Karachi, November 7, 2025: VIS Credit Rating Company Limited (VIS) has finalized short term rating of Mahmood Textile Mills Limited’s (‘MEHT’, ‘MTML’ or ‘the Company’) Short-term Sukuk 2 (STS-2) rating at ‘A1’ (A One) Short term rating of ‘A1’ reflects strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Previous rating action was announced on October 9, 2025.
MTML is the flagship entity of the Mahmood Group, with a longstanding presence in the textile export sector. Over time, MTML has progressively evolved into a fully vertically integrated operation. The Company has undertaken capital expenditures in the last few years to establish a modern apparel manufacturing unit featuring advanced production technologies and substantial automation.
The textile sector remains exposed to moderate to high business risks stemming from economic cyclicality, global competition, and structural inefficiencies. Volatile cotton output, import dependence, rising input costs, and policy-driven energy and tax reforms continue to constrain margins. However, decline in policy rates expected to ease financial pressure through lower borrowing costs.
MEHT issued a secured, privately placed short-term sukuk, amounting up to PKR 6,000 million, inclusive of a green shoe option of PKR 2,000 million. The STS-2 has a tenor of up to six months from the issue date. The issuance date was October 13, 2025 and accordingly maturity date will fall on April 13, 2026. Proceeds are to fund working capital requirements of the Company. The Sukuk carries a single bullet repayment of principal at maturity, with profit payable alongside the principal amount. The profit rate is benchmarked to the six-month Karachi Interbank Offered Rate (KIBOR) plus 45 basis points, fixed on the last working day prior to issuance and applicable for the full tenor. Moreover, the Company has outstanding Short-term Sukuk (STS-1) amounting to Rs. 3,000m, which is scheduled to mature on January 7, 2026.
The assigned rating reflects the strong footprint of the Mahmood Group across the textile value chain and related businesses, as well as the security structure supporting the instrument. This includes charge over assets, availability of equivalent working capital lines, buildup of a dedicated payment account (DPA), and the planned sale of operating assets and shares of Orient Power Company (Pvt.) Limited to reduce leverage. Rating remains underpinned on management’s ongoing efforts to strengthen the balance sheet.
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
Instrument Rating:
(https://backupsqlvis.s3.us-west-2.amazonaws.com/Methodologies-2025/IRM-Apr-25.pdf)