Press Release

VIS Assigns Initial Ratings to Pakistan Tiles (Pvt.) Limited

Karachi, May 18, 2022: VIS Credit Rating Company Limited (VIS) has assigned initial entity ratings of ‘BBB+/A-2’ (Triple B Plus/A-Two) to Pakistan Tiles (Pvt.) Limited (PTPL). The medium to long-term rating of ‘BBB+’ denotes adequate credit quality coupled with reasonable protection factors. Moreover, risk factors are considered variable if changes occur in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

PTPL is involved in manufacturing of ceramic and porcelain tiles, primarily distributed through its associated concern. PTPL is a part of Abu Yousaf Group, mainly engaged in retail trading of wide range of local and imported sanitary items, ceramic and porcelain tiles, kitchen ware and home office furniture for more than two decades. The company started commercial operations in July 2018 and net revenue has depicted a sizeable growth since then on a YoY basis due to already established and growing customer base. Gross margins improved notably in FY21 on account of economies of scale and higher average rates of premium tiles, which contributed nearly half to the topline. Liquidity position improved in line with higher funds flow from operations and is considered adequate in terms of cash flow coverages. The leverage indicators are also considered manageable. The management expects profit margins to remain largely intact as increasing costs of imported raw material along with fuel and power are passed on to customers as there is a significant price differential between local and imported tiles. However, any relaxation in regulatory import duties on raw material may have negative connotation for the local industry. Meanwhile, the ratings are constrained by weak corporate governance framework. The ratings will remain sensitive to increase in revenue, adequate coverages, further enhancement in capitalization indicators as projected by the management and improvement in governance framework.

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 info@vis.com.pk


Sara Ahmed
Director


VIS Entity Rating Criteria: Corporates (August 2021)
https://docs.vis.com.pk/docs/CorporateMethodology202108.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 2022 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .