Press Release

VIS Reaffirms Entity Ratings of Izhar Construction (Pvt.) Limited

Karachi, December 12, 2022: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Izhar Construction (Pvt.) Limited (ICPL) at ‘A-/A-1’ (Single A-/A-One). The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-1’ denotes high certainty of timely payment, with excellent liquidity factors and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 29, 2021.

The ratings assigned to ICPL take into account the company’s sound business risk profile emanating from its association with Izhar Group of Companies having an established footprint and strong brand equity in the construction business developed over the years. The ratings also incorporate inherent synergies and diversification in the group structure, providing implicit strength to the business model.

During FY22, ICPL’s topline exhibited growth in line with execution of construction projects while the company was able to maintain its gross margins YoY despite increase in overall cost of project completion due to inflationary pressure, and highly competitive bidding in large contracts. Net margins improved notably primarily on the back of considerably higher other income emanating from gain on sale of fixed assets and investment property. Liquidity in terms of cash flows remained suppressed due to limited funds from operations amidst higher adjustments related to other income. Nonetheless, non-funded obligations are an integral part of the business model. The working capital management remained strong as evident from adequate current ratio and shorter net operating cycle vis-à-vis industry median. Sound capitalization in the presence of conservative capital structure further lowers the financial risk of the company. Meanwhile, the ratings remain sensitive to ICPL’s presence in high business risk sector involving capsizing of revenues owing to political unrest & instability, and volatile economic environment. The ratings will remain dependent on upholding financial metrics involving timely completion of key commercial projects without any significant cost and time overruns. In addition, sustaining topline with collection efficiency to avoid cash flow mismatches will remain a critical rating driver.

For further information on this rating announcement, please contact Ms. Tayyaba Ijaz, CFA at 042-35723411-13 (Ext. 8004) and/or the undersigned at 021-35311861-66 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Corporates (August 2021)

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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .