Press Release

VIS Assigns Initial Ratings to Highnoon Laboratories Limited

Karachi, September 20, 2023: VIS Credit Ratings Company Ltd. (VIS) has assigned initial entity ratings of ‘A+/A-1’ (Single A plus/A-One) to Highnoon Laboratories Limited (“Highnoon” or “the Company”). Medium to long-term ratings of ‘A+’ signifies good credit quality with adequate protection factors. Risk factors are considered variable if changes occur in the economy. Short term ratings of ‘A-1’ denote high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors; risk factors are minor. Outlook on the assigned ratings is ‘Positive’.

Highnoon Laboratories Limited was incorporated in 1984 as a private limited company and later listed on the Pakistan Stock Exchange in 1995. The Company focuses on manufacturing and marketing a diverse range of pharmaceutical products across various therapeutic areas, notably in Respiratory, Inhalation, Cardio, Diabetes, and Anti-infective and is currently ranked as the 12th largest pharmaceutical company in Pakistan. Its facility and corporate offices are situated in Lahore. In CY22, Highnoon reported revenue of Rs. 15,816 mln CY21: Rs.13,001 mln), demonstrating a growth of ~22% Y/Y, attributable to increased volumes as well as selling prices.

Assigned ratings incorporate low business risk profile of the pharmaceutical industry given the relatively inelastic nature of demand. However, profitability pressures are created due to a stringent regulatory framework and price controls under Drug Regulatory Authority of Pakistan (DRAP) together with exposure to exchange rate risk given substantial imported raw material. Ratings also take into account Highnoon’s diverse product portfolio with a presence in over 50 therapeutic segments. The company's top 5 brands account for around 31% of turnover, showcasing a low concentration risk. Highnoon's product line includes both acute and long-term treatment options, providing a good mix of high and low margin products.

Over the past five years, the Company has achieved a Compound Annual Growth Rate (CAGR) of 22%, resulting in significant revenue growth. Company's consistent sales growth over the years has been supported by stable margins. Despite raw material price increase and exchange volatility, the Company was able to maintain margins, only showing signs of escalating input costs in 1QCY23. However, management expects a recovery with recent price hike approval by DRAP and projects margins to recoup going forward.

Ratings also factor in sound liquidity profile of the Company as reflected in its strong current ratio and heathy debt service coverages. However, on a timeline basis, cash holding depicts a decline on account of increase in working capital requirements for higher buffer stocks. Ratings also draw comfort from a conservative capital structure. Despite debt increasing, strong profit generation year over year has kept gearing and leverage indicators within reasonable levels. Ratings remain underpinned on management’s projected margins and maintenance of capitalization indicators over the rating horizon.

For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 207) at 021-35311861-64 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)
VIS Issue/Issuer Rating Scale

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