Press Release
VIS Finalizes Rating of Short Term Sukuk of Citi Pharma Limited
Karachi, February 13, 2025: VIS Credit Rating Company Limited (VIS) has finalized short term rating of ‘A1’ (A one) to the Short-Term Sukuk (STS) issue of Rs. 1,500 million of Citi Pharma Limited (‘CPHL’ or the ‘Company’). The short-term rating of ‘A1’ indicates strong likelihood of timely repayment of short-term obligations with excellent liquidity factors. The entity rating of Citi Pharma Limited stands at ‘A/A1’ (‘Single A/A One’) with a ‘Stable’ outlook. Previous rating action was announced on December 16, 2024.
CPHL has issued a rated, unsecured, privately placed, short-term, Musharakah (Shirqat ul Aqd) based sukuk of PKR 1.5 billion, including a green shoe option of PKR 500 million on January 23, 2025, to meet the Company's working capital requirements. The Sukuk has a tenor of six months, with profit of 6M KIBOR + 80 bps per annum payable upon maturity on the outstanding principal amount, while the principal will be redeemed as a bullet payment on July 23, 2025. The Company is to maintain a Sukuk Payment Account (SPA), in which an amount equivalent to 1/6th of the provisional profit, is to be deposited, within no later than 10 business day on monthly basis.
The assigned rating incorporates the low business risk of the API industry, characterized by high demand, low economic sensitivity, and supportive government policies aimed at promoting local production to reduce reliance on imports from India and China. Additionally, high entry barriers, including stringent regulations, lengthy approval processes, and substantial research and development investments, serve to moderate competition in the sector.
The rating reflects CPHL’s strong revenue growth, despite relatively low margins in its API segment, which require elevated working capital investments. Strategic partnerships with global firms like Murli Krishna Pharma (India) and Hangzhou Newsea Technology Co. Ltd (China) aim to enhance API production efficiency through automation and position the Company for potential international expansion. CPHL is diversifying into high-margin formulations via proprietary brands and institutional sales, supported by rising provincial healthcare budgets, while expanding into nutraceutical exports.
Efforts to mitigate client and product concentration risks through portfolio diversification are underway. The Company maintains a strong liquidity and profitability profile, with a strategic focus on meeting the pharmaceutical industry's evolving demands. Maintaining capitalization metrics while sustaining growth will be crucial for the rating, along with ensuring sufficient short-term credit lines to support liquidity needs.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Corporates:
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
Applicable Rating Criteria: Rating the Issue
https://docs.vis.com.pk/docs/Rating-the-Issue-Aug-2023.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 .