Press Release
VIS Assigns Preliminary Rating to Mahmood Textile Mills Limited’s Proposed Short-Term Sukuk 7 (STS-7)
Karachi, July 17, 2026: VIS Credit Rating Company Limited (VIS) has assigned preliminary rating of ‘A1 (plim)’ to Mahmood Textile Mills Limited’s (‘MTML' or ‘the Company’) proposed Short Term Sukuk 7 (STS-7). Short term rating of ‘A1’ reflects strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Rating to be finalized on review of executed documents.
MTML intends to issue a privately placed, unsecured Short-Term Sukuk (STS-7) of PKR 4,000 million (inclusive of PKR 1,000 million green shoe option) with 6 months tenure, to finance working capital needs. The Sukuk will carry a single bullet repayment of principal at maturity. The profit rate will be benchmarked to the three-month Karachi Interbank Offered Rate (KIBOR) plus 100 basis points, set on the last working day prior to issuance with quarterly base rate revision. Assigned rating derives comfort from risk reduction through credit enhancement in the form of Sukuk payment mechanism wherein the Company shall establish and maintain a Sukuk Payment Account (SPA), to be built up in the last 15 days of instrument maturity and complete funding to be arranged 7 working days before maturity date. MTML boasts a sufficient short-term funded cushion as of 31 May 2026. This liquidity buffer allows the Company to scan and draw upon these underutilized short-term lines, without putting liquidity strain.
The assigned rating reflects the strong footprint of the Mahmood Group across the textile value chain and related businesses. Financial risk remains adequate, supported by better working capital management and sufficient cash flows. Although leverage is elevated, planned divestment of power assets by end of 2026, is expected to support deleveraging. The management’s plan to deleverage the books through further sale of investment in Orient Power Company (Private) Limited. Rating remains underpinned by 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://docs.vis.com.pk/Methodologies-2025/IRM-Apr-25.pdf