Press Release

VIS Upgrades Entity Ratings of Taj Gasoline (Private) Limited

Karachi, August 20, 2024: VIS Credit Rating Company Limited (‘VIS’) has upgraded the entity ratings of Taj Gasoline (Private) Limited (TGPL) to 'A/A-2' (‘Single A /A-Two’) from ‘A-/A-2’ (‘Single A Minus/A-Two’). The medium to long-term rating of ‘A’ denotes good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short-term rating of ‘A-2’ reflects good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous Rating action was announced on May 24, 2023.

Taj Gasoline is an Oil Marketing Company (OMC) involved in the business of procurement, storage, marketing and sale of petroleum and related products. The Company forms part of the Taj Group which has been in the downstream oil business for five decades and over the years have expanded into the Hospitality business with restaurants operating under Royal Taj, Piatto, Soda Shoda and YELO in addition to running one hotel under Hotel One-(PC) banner.

The Company is strategically enhancing its operations., increasing the number of sites to 75, primarily in Sindh, while targeting new regions in Punjab. Additionally, the Company is expanding storage capacities in KPK and Sindh. These expansions are expected to elevate the total storage capacity by FY25.

Ratings incorporate high to medium business risk profile of the OMC segment, characterized by high cyclicality, strong regulatory oversight and low pricing power. Assigned ratings reflect company’s strong volume growth relative to the industry. While industry volumes recorded a decline on account of slowdown in economic activity amidst high interest rates, elevated prices of MS and HSD, decreased power generation using Furnace Oil and increased smuggling, TGPL was able to grow its volumes on the back of network expansion thereby increasing market share of the Company. Margins of the Company adjusted for exchange gains/losses also reflect stability. Assigned ratings incorporate Company’s favorable capitalization profile with low gearing supported by equity injection. Maintenance of capitalization profile in the wake of growth plans of the Company will remain important for ratings going forward. Ratings are further supported by adequate liquidity profile and sound cash flow coverage.

For further information on this ratings announcement, please contact at 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 .