Press Release

VIS Reaffirms Entity Ratings of Lucky Knits (Pvt.) Limited (LKPL)

Karachi, November 17, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of Lucky Knits (Pvt.) Limited (LKPL) at ‘A-/A-1’ (Single A Minus/A-One). Medium to long-term entity rating of ‘A-’ signifies good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short Term Rating of ‘A-1’ indicates high certainty of timely payment, liquidity factors are excellent and supported by good fundamental factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 04, 2022.

Incorporated in 2004, Lucky Knits (Private) Limited (LKPL) is primarily involved in the manufacturing and exports of knitted apparel with product lines ranging from T-shirts, polo shirts, trousers, hoodies, top tanks, boxers, and garments. LKPL is a partly vertically-integrated manufacturing facility having separate knitting, dyeing, and stitching units in Karachi. Cotton/blended yarn is the main raw material of LKPL, which is procured from a group concern- Gadoon Textile Mills Limited.

Assigned ratings draw comfort from a strong sponsor profile (Yunus Brothers Group) which has a diversified presence across various sectors. Sponsor support is evident from a long-term unsecured interest-free loan from the director and associated company (Lucky Energy (Private) Limited) for business operations in 2015. Going forward, the presence of sponsor support in case the need arises will be important from a ratings perspective.

Despite the decrease in Pakistan textile exports by 10% Y/Y (in USD terms) during FY23, LKPL registered a significant increase in its export sales. However, the same is highly concentrated on a single US-based customer. As per the management, diversification plans are in place for the addition of new clients to the portfolio. The topline of FY23 clocked in at Rs. 8.2b, up by 44% Y/Y amid enhancement in installed capacities and achieving higher capacity utilization. Overall profitability metrics of LKPL continued to improve on the back of better economies of scale and increased operating efficiency. Going forward, margins are expected to stay in check due to the expectation of lower exchange gain and increased cost pressures during FY24.

Moreover, assigned ratings also incorporate improved cashflow coverages amid higher profitability while liquidity indicators remained adequate during the period under review. Going forward, improvement in liquidity indicators with higher projected profitability is considered important from the rating perspective. Further, ratings are underpinned by the strengthening of the capitalization profile as overall equity registered a notable growth due to improvement in profitability. Maintenance of the same will also remain a key rating driver.

For further information on this rating announcement, please contact Mr. M. Amin Hamdani (Ext: 217) or the undersigned (Ext: 207) at (021) 35311861-4 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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