Press Release

VIS Maintains Entity Ratings of Shifa International Hospitals Limited

Karachi, April 7, 2025: VIS Credit Rating Company Limited (‘VIS’) has maintained the entity ratings of Shifa International Hospitals Limited (‘SIHL’ or ‘the Company’) at ‘AA-/A1’ (Double AA Minus/A One). Medium to long term rating of 'AA-' indicates high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short-term rating of 'A1' suggests strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating has been revised from ‘Stable’ to ’Positive’. Previous rating action was announced on February 01, 2024.

SIHL was incorporated in Pakistan in 1987. It was converted from a private to a public limited company in 1989, and is listed on the Pakistan Stock Exchange Limited (“PSX’’). The Company operates within the healthcare sector, focusing on the establishment and management of medical centers and hospitals across Pakistan. SIHL established its first hospital in 1993 in Islamabad, followed by a second facility in Faisalabad and another in Islamabad. In addition to hospital services, SIHL manages medical centers, and laboratory collection points across various cities in Pakistan.

The assigned ratings incorporate the business risk profile of the healthcare industry, which is assessed as medium-to-low sector risk. This assessment reflects the essential nature of healthcare services, stable demand dynamics, non-cyclical demand structure, and high consumer spending. The industry is characterized by moderate regulatory complexities and a highly fragmented market, with competition shaped by high entry barriers, regulatory requirements, and localized market conditions. Despite these factors, the sector remains exposed to risks, including affordability constraints for patients, dependency on imported medical equipment, gradual expansion due to high capital intensity, risks of technology obsolescence, and service quality gaps. Moreover, the assigned ratings also factor in the Company’s position as a leading hospital in the country.

The assigned ratings also factor in the financial risk profile of the company. The improvement in SIHL’s financial performance has been driven by a notable increase in revenue growth in FY24 that has continued into 1HFY25. The topline growth is primarily attributed to both volume and price increase and a shift in the mix of medical services utilized by patients, while overall patient flow has increased. The company’s operating margin improved in both periods under review, supported by cost management measures. According to SIHL’s management, these measures include effective cost control, enhanced consumption management and disciplined oversight of expenditures. As a result, the net profitability improved and net margin also strengthened. The company’s coverage profile remained strong in FY24 and further improved in 1HFY25 due to lower debt levels, driven by the maturity of long-term facilities, along with increased profitability and cash flows. Capitalization metrics strengthened due to timely repayment of long-term debt and equity enhancement from profit retention. Additionally, the liquidity profile remains adequate, supported by healthy operational cash flows.

The change in the ratings outlook reflect the company’s expansion strategy, including the development of a separate hospital subsidiary in Faisalabad, Shifa National Hospital Faisalabad (Private) Limited (SNHFL), the first phase of SNHFL, aimed at operationalizing outpatient, diagnostics, emergency, urgicare and pharmacy by December 31, 2025 and complete operationalization of phase 1 in 2026. Additionally, the company’s recent strategic initiatives, such as the divestment from non-profitable segments like Shifa International DWC-LLC (SIDL), the consolidation of Shifa Neuro Sciences Institute Islamabad (Private) Limited (SNSIIL) into SIHL to improve operational coordination and cost efficiency, and the overall growth trajectory in financial performance, support the revision in rating outlook.

Going forward, the assigned ratings will remain contingent on SIHL’s ability to sustain its financial performance, along with the timely execution of its consolidation initiatives and planned expansion projects.

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://docs.vis.com.pk/docs/VISRatingScales.pdf

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .