Press Release

VIS Reaffirms Entity Ratings of NASDA Green Energy Limited

Karachi, October 10, 2024: VIS Credit Rating Company Limited (‘VIS’) has reaffirmed the entity ratings of NASDA Green Energy Limited (‘NGEL’ or ‘the Company’) at ‘A-/A-2’ (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 'A-2' 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 August 08, 2023.

NGEL was incorporated in Pakistan on June 11, 2015, as a private limited company. On October 20, 2022, the Company was converted into a public unlisted company. The main object of the Company is to carry on business of generation and sale of power using wind energy. The registered office of the Company is located at Shahrah E Faisal, Karachi. The principal place of business of the Company is located at Thatta, Sindh, Pakistan.

Assigned ratings take into account the business risk profile of the renewable energy sector, which is characterized as medium-to-low. The power demand remains influenced by demographic factors and industrial activity. Despite the impact of macroeconomic conditions on industrial activity, household demand is expected to remain stable due to its inelastic nature and population growth. Government policies, including the Alternative Renewable Energy (ARE) Policy 2019 and the Integrated Generation Capacity and Expansion Plan (IGCEP) 2022, reflect continued support for renewable energy projects to increase the share of renewables in the energy mix. The sector, however, faces challenges related to political and macroeconomic uncertainties and the regulated operating environment.

Assigned ratings also consider the Company's profitability, capitalization, liquidity, and coverage profiles. Revenue growth was driven by increases in non-project missed volume and delayed payment interest. While the gross margin improved, net profit declined due to elevated finance costs, leading to a reduced net margin. Debt servicing showed improvement, with an increased debt service coverage ratio resulting from higher funds from operations. Capitalization metrics strengthened, reflected by lower gearing and leverage ratios due to an enhanced equity base and repayment of short-term debt. The liquidity position remained constrained due to a significant current portion of long-term debt, causing current liabilities to exceed current assets.

Going forward, ratings will remain sensitive to materialization of internal cashflows and improvement in the mismatch between current liabilities and current assets. Moreover, continued enhancement of the capitalization profile as well as maintenance of the coverage profile to be commensurate with assigned ratings will also be important considerations.

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

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 2024 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .