Press Release

VIS Reaffirms Ratings of Mughal Iron and Steel Industries Limited

Karachi, November 25, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Mughal Iron & Steel Industries Limited (MISIL) at ‘A+/A-1’ (Single A Plus/A-One). Rating of outstanding Sukuk has been reaffirmed at ‘A+’ (Single A Plus). Long-term rating of ‘A+’ denotes good credit quality and adequate protection factors; risk factors may vary with possible changes in the economy. Short-term rating of “A-1” denotes high certainty of timely payment, excellent liquidity factors supported by good fundamental protection factors. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on December 28, 2021.

The ratings assigned to MISIL incorporate the company’s prominent position as one of the main players in the long-steel sector of Pakistan. The business risk profile of the long steel sector is relatively high on account of sensitivity to changes in exchange rate and volatile nature of raw material prices. However, the risk profile is supported by a positive demand outlook, increased ferrous melting capacity and ongoing capacity expansion in non-ferrous segment and operational efficiency projects focusing on improved market penetration and outreach. Prospects of the industry are strong going forward; however, rising cost of doing business, inflationary pressures coupled with rising commodity prices and onset of monetary tightening regime is likely to impact profitability across the entire steel sector, going forward.

The ratings also incorporate the assessment of financial risk profile which draws support from sizeable growth in revenue and profits over the review period. Growth in ferrous segment was mainly due to higher selling prices of rebars and girders, supported by sizeable activity in the construction sector. Due to the volatile nature of steel prices in the international market, margins showed slight improvement in the outgoing year yielded by inventory gains. Going forward, profit margin is expected to remain range-bound because of rising finance cost. The ratings reflect improvement in liquidity profile of the company during the rating review period; the same is supported by adequate cash flows generation in relation to outstanding financial obligations. Going forward, maintenance of liquidity position is considered imperative from ratings perspective. The leverage indicators also exhibited improvement during the outgoing year; however, the same continue to remain on a higher side than industry averages. Nevertheless, although there are capex plans in perspective, leverage indicators are expected to trend downwards or at least remain at current levels given no additional long-term funding is planned to be procured during the ongoing year. The ratings will remain dependent on maintenance of margins, timely completion of expansion initiative coupled with incremental cash flow generation from the same and maintenance of leverage indicators within prudent limits.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Faryal Ahmed Faheem
Deputy CEO

Applicable rating criterion: Corporates (August 2021)

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