Press Release

VIS Reaffirms Entity Ratings of Sindh Modaraba

Karachi, November 13, 2024: VIS Credit Ratings Company Ltd. (VIS) has reaffirmed entity ratings of Sindh Modaraba (‘SM’ or the ‘Modaraba’) at ‘A+/A1’ (Single A Plus/A One). The medium to long-term rating of ‘A+’ signifies good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A1’ denote strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned rating is ‘Stable’. The previous rating action was announced on September 06, 2023.

The ratings assigned to SM reflect strong sponsor profile of the Government of Sindh (GoS), which holds a 94.3% stake in SM through Sindh Modaraba Management Limited (SMML). These ratings also consider financial stability and management expertise of SMML. SM is a publicly listed Modaraba on the Pakistan Stock Exchange (PSX), providing Shariah-compliant Islamic financing to its clients. The Modaraba operates from its head office in Karachi, with a branch in Lahore.

The ratings take into account the recent improvements in profitability metrics, aligned with rise in interest rates during the past period. Additionally, the ratings are supported by anticipated growth in the financing portfolio, supported by a favorable economic environment, which is expected to stimulate lending and financing activities. However, the assigned rating will remain contingent upon SM’s ability to sustain profitability in a low-interest-rate environment while maintaining asset quality. While the Modaraba’s liquidity and capitalization profiles remain sound, SM plans to divest from short-term investments due to declining interest rates, which will impact its liquidity going forward. In FY24, changes included onboarding of a head of marketing to drive growth, technological advancements to streamline operations, and the re-election of Board members, The impact of these changes on overall operations will be a key factor in future ratings considerations.

For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk


Applicable Rating Criteria:

Applicable Rating Criteria: Non-Bank Financial Companies
https://docs.vis.com.pk/Methodologies%202024/NBFCs202003.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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .