Press Release

VIS Revises Short-term Entity Ratings of Lucky Textile Mills Limited.

Karachi, December 2, 2024: VIS Credit Rating Company Limited (VIS) has upgraded entity ratings of Lucky Textile Mills Limited (LTML) to ‘AA-/A1+’ (Double A Minus/A One Plus) from ‘AA-/A1’ (Double A Minus/A One). Medium to long-term entity rating of ‘AA- reflects high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short Term Rating of ‘A1+’ indicates strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on November 20, 2023.

LTML, a public unlisted company, is part of the Yunus Brothers Group (YBG) and is wholly owned by Y.B. Holdings (Private) Limited. Y.B. Holdings has a diversified presence across various sectors including power generation, cement, real estate, textile, chemicals, pharmaceuticals, food, entertainment and automotive sectors. LTML operates as a vertically integrated entity engaged in the spinning, weaving, processing and stitching of a wide variety of products, categorized into home textiles, garments and fabric. The Company’s head office and its factories are located in Karachi.

Assigned ratings incorporate the medium business risk profile of the textile sector in Pakistan, marked by exposure to economic cyclicality and intense competition. The sector's performance is notably influenced by broader economic conditions, rendering it susceptible to demand fluctuations driven by economic factors. Furthermore, as a substantial contributor to total exports, the textile industry faces exposure to global economic cyclicality, geopolitical challenges, and inconsistencies in domestic fiscal policies and procedures. Supply-side risks, including fluctuation in local cotton crop production and reliance on imported raw materials, expose the sector to significant exchange rate risk.

The ratings reflect LTML’s strong sponsor profile, diversified investment portfolio, and successful integration of its spinning unit. The Company has exhibited revenue growth, driven largely by rupee devaluation and higher prices. Additionally, a shift in the composition of the export market has led to reduced client concentration in export sales, further enhancing stability. LTML continued to demonstrate strong profitability margins in FY24.

The expansion of the equity base, coupled with a reduction in total debt, has improved gearing and leverage ratios. While the Debt Service Coverage Ratio (DSCR) has experienced a slight decline due to an increased current portion of long-term debt, the Company continues to maintain a strong DSCR position. Moving forward, sustaining margins, coverages, and leverage ratios will remain important from the ratings perspective.

For further information on this rating announcement, please contact at (021) 35311861-4 or email at info@vis.com.pk





Applicable Rating Criteria: Corporate
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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