Press Release

VIS Upgrades Entity Ratings of BBJ Pipe Industries Limited

Karachi, January 20, 2025: VIS Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of BBJ Pipe Industries Limited (“BBJP” or “the Company”) to BBB+/A2 (Triple BBB plus/ Single A Two) from ‘BBB/A2’ (Triple BBB / Single A Two). Medium to long term rating of BBB+' indicates adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur 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 January 02, 2024.

BBJ Pipe Industries Limited (“BBJP’’ or “the Company’’) was incorporated in 1991 as a private limited company and was later converted into a public unlisted company in 2013. It is a family-owned business primarily engaged in the manufacturing and supply of a wide variety of pipes. The Company specializes in manufacturing Steel & Polyethylene tubes and pipes, tailored to various sizes and specifications to meet customer and market demands. BBJP operates four major manufacturing units, located in the Industrial estate in Chunian, Lahore. The Company's registered office is situated in Lahore, with a regional office in Islamabad. BBJ Group consists of two main companies; BBJ Pipes Industries Limited and BBJ Steel Limited (BBJS), which was a part of BBJP until FY18, and was later separated as a separate legal entity (100% owned subsidiary of BBJP) in FY19.

Assigned ratings take into account the business risk profile of the Company, which operates within the steel and polyethylene pipes and tubes sector in Pakistan. The sector exhibits a high-risk profile due to its cyclical nature and dependence on key consuming industries, including construction, water, oil, gas, and automobiles. Competitive dynamics, market concentration, and pricing pressures further influence the operating environment. The reliance on imported Hot Rolled Coils (HRC), subject to heavy taxation, impacts production costs and profitability. Macroeconomic factors, such as elevated inflation and high interest rates, have constrained construction activity, affecting demand. In FY24, reduced activity in development and rehabilitation projects, along with global price volatility and exchange rate fluctuations, added to the sector's challenges.

Ratings upgrade considers stability and marginal improvement in financial risk metrics, despite prevailing challenges. Revenue growth in FY24 was driven by increased volumes in the polyethylene segment and higher product prices; however, gross margins normalized due to exchange rate stabilization. Margins improved slightly in 1QFY25, supported by price adjustments and a favorable sales mix. The Company’s capitalization profile improved due to debt reduction, leading to lower gearing and leverage ratios. Liquidity and coverage profiles remained aligned with assigned ratings, with consistent current ratios and improved debt service coverage ratios supported by reduced finance costs. Operational cash flows, although constrained, were sufficient to meet short-term obligations with minimal reliance on external debt.

Going forward, the assigned ratings remain sensitive to the sustainability of financial risk profile, effective management of working capital, and the ability to capitalize on improving economic conditions. Lower interest rates are expected to support construction activity, positively impacting demand. Any significant deviation in liquidity, capitalization, or profitability metrics could impact the ratings.

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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .