Press Release

VIS Reaffirms Entity Ratings of Kamal Limited

Karachi, April 25, 2025: VIS Credit Rating Company Limited has reaffirmed entity ratings of Kamal Limited (KL) at 'A/A1' (Single A/A One). Medium to long term rating of 'A' reflects good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A1' indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. Outlook on the assigned ratings remains Stable. Previous rating action was announced on May 03, 2024.

KL is a family owned, vertically integrated textile manufacturer with operations covering spinning, weaving, knitting, dyeing, finishing, printing, stitching and garment production. The Company is primarily export-oriented, focusing on value-added products such as garments and home textiles, to customers across regions including Europe, Asia, the United States, Africa and Australia. In the local market, KL operates under the retail brand ‘So Kamal’, which currently operates and sells its products online and through 20 franchise locations.

Pakistan’s textile sector faces persistent challenges driven by economic cyclicality, intense competition and structural constraints. The industry remains highly sensitive to demand fluctuations, exposing it to broader economic pressures. In FY24, cotton production rose by 79% due to a low base, but it declined by 59.4% YoY by October 2024. While a rebound to 5.55 million bales is projected for FY25, it remains uncertain amid limited cultivation area, rising energy costs and climate-related risks such as floods and pest infestations. Despite these issues, 3QFY25 textile exports grew, led by value-added segments and reliance on imported cotton. However, profitability remains vulnerable to raw material price volatility, inflation and exchange rate movements. Additional cost pressures stem from a 23% gas price hike from March 2025 and the transition to the Normal Tax Regime, both of which are expected to strain margins further.

The assigned ratings consider KL’s strong revenue growth, significantly improved profitability and a stable financial risk profile. The Company’s vertically integrated operations support cost efficiencies and margin stability, while continued export-led topline growth strengthened internal cashflows. Liquidity improved, driven by better working capital management and shorter net operating cycle, translating into adequate coverage of financial obligations. The ongoing expansion is being supported through additional borrowings however, overall capitalization and debt servicing capacity remain within manageable levels.

Going forward, the ratings remain sensitive to the Company’s ability to improvement in gearing and coverage metrics.



For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf

VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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