Press Release

VIS Upgrades Entity Ratings of H.A Fibres (Pvt.) Limited

Karachi, December 10, 2024: VIS Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of H.A Fibres (Pvt.) Limited (‘HAFL’ or ‘the Company’) to ‘A/A2’ (Single A/A Two) from ‘A-/A2’ (Single A minus/A Two). Medium to long term rating of 'A' indicates good credit quality; Protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of 'A2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings remains ‘Stable’. Previous ratings action was announced on October 02, 2023.

HAFL, established in May 2006 as a private limited company, operates as a spinning unit based in Multan. It is part of the H.A. Group, which also includes Husnain Textile Mills (Pvt.) Limited (HTML) and Palm Villas, an Association of Persons engaged in the real estate sector. HAFL holds a 30.21% equity stake in HTML, designating it as an associate company.

The assigned ratings consider the high-to-medium business risk profile of Pakistan's textile spinning sector. This evaluation considers demand-side challenges and supply-side constraints, including raw material availability, energy shortages, and evolving regulatory policies. While domestic cotton production increased in FY24, reducing reliance on imports, elevated energy tariffs have significantly impacted operational costs. The sector also contends with competitive pressures from regional peers and macroeconomic challenges, such as currency depreciation and high inflation. Regulatory uncertainties, particularly the removal of preferential energy tariffs for export-oriented sectors, have introduced additional risks. The Company’s business risk profile incorporates client concentration, albeit the same has progressively declined to be in line with industry norms. This improvement is supported by the Company's long-term customer relationships and specialized product portfolio.

Ratings also incorporate the Company’s financial risk profile. Profitability improved during the period under review, supported by capacity expansions and higher export demand, contributing to revenue growth and improved gross margins. The capitalization profile remains conservative, despite an increase in leverage metrics due to ongoing investments in capacity enhancement. Liquidity and coverage remain sound, despite the impact of an elevated interest rate environment on coverages in recent years. Going forward, the assigned ratings remain sensitive to the Company’s ability to sustain profitability margins, maintain coverage metrics and a balanced capitalization profile.

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













Applicable Rating Criteria:
Industrial 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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