Press Release

VIS Maintains Entity Ratings of Naveena Exports Limited

Karachi, April 12, 2023: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Naveena Exports Limited (NEL) at ‘A/A-1’ (Single A/A-One). Medium to long-term rating of ‘A’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A-1’ signifies high certainty of timely payment. Liquidity factors are excellent and supported by good fundamental protection factors; risk factors are minor. Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. Previous rating action was announced on February 25, 2022.

Ratings incorporate sound sponsor group, long-standing 34 year history of exporting denim fabric, diversified client base, increased production capacity and strong sales growth with consistent margins overtime. However, the recent global slowdown in demand impacted profitability and cash flows in the current fiscal year. Despite this, debt coverage metrics remain satisfactory, and leverage ratios though have increased still compare favorably to peers. Moreover, strong export orientation and moderate reliance on imported cotton are viewed positively. Ratings also take of recent ownership transfer to Naveena Group (Private) Limited, which now serves as the holding company for NEL and four other associate entities in steel, real estate, equity market/other investments sectors.

Sales revenue grew strongly for two consecutive years, mainly driven by higher prices in dollar terms and rupee devaluation. Over 90% of revenue comes from exports (direct & indirect sales), with fabrics comprising the entirety of export revenues and yarn sold exclusively in the local market. Two-thirds of exports go to Bangladesh and Egypt, with the remainder spread across other regions. Client concentration is deemed satisfactory, with most of them serving well-known global retail brands like Levi Strauss and Zara.

Business risk profile takes into account industry wide growth in exports over the last year; however, recent floods across the country, high interest rate situation, inflationary pressures, higher electricity costs and demand slow down pose risks on the sector over the medium term. Rating outlook has been revised due to the constraints posed by the weak macroeconomic environment, both globally and locally. Going forward, maintenance of financial performance metrics will remain important for ratings.

For further information on this rating announcement, please contact Mr. Muhammad Tabish (Ext: 206) or the undersigned (Ext: 207) at (021) 35311861-4 or email at info@vis.com.pk


Sara Ahmed
Director

Applicable Rating Criteria: Industrial Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.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 2023 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .