Press Release

VIS Reaffirms Entity Ratings of Lucky Cement Limited

Karachi, October 31, 2023: VIS Credit Rating Company Limited has reaffirmed the entity ratings of ‘AA+/A-1+’ (Double A Plus/A-One Plus) to Lucky Cement Limited (LCL). The medium to long-term rating of ‘AA+’ signifies high credit quality; Protection factors are strong. The short-term rating of ‘A-1+’ signifies high certainty of timely payments; short-term liquidity including internal operating factors and/or access to alternative sources of funds is outstanding and safety is just below risk-free Government of Pakistan’s short-term obligations. Outlook on the assigned rating is ‘Stable’. Previous rating action was announced on June 10, 2022.
The ratings assigned to LCL’s draw support from financial strength of the sponsor, Yunus Brother Group (YBG), having diverse presence across multiple sectors including Cement, Textiles, Power Generation, Chemicals, Automobile, Pharmaceuticals, Health Care, Real Estate, Entertainment, Food & Commodities and others. The ratings take into account the change in business risk profile of the cement industry given decline in volumetric sales owing to dampened local market demand amid weak macroeconomic indicators. However, the long-term outlook for cement industry remains positive, given Pakistan’s status as a developing nation, low per capita consumption of cement and easy domestic availability of limestone. Further, overall business risk profile of the Company is strengthened by diversified investments in multiple sectors. VIS foresees the other income to remain sizable in the future on the back of expected dividend from investment in power segment which is yielding sound operating results. The ratings also factor in sound corporate governance framework underpinned by robust organizational structure, experienced management team and strong commitment to transparency & disclosures.
The assessment of financial risk profile reflects uptick in revenues, sound margins & profitability indicators, sizable cash flow coverages and optimal capital structure. Cashflow coverage indicators remained commensurate with the benchmarks for the assigned ratings. Going forward, LCL plans to incur an estimated capital expenditure of around Rs. 11b on renewable power projects during the rating horizon; the same while exhibiting Company’s strong commitment towards sustainable environment practices will not only contribute in addressing dual challenge of energy shortage and climate change prevalent in Pakistan but also result in cost rationalization for the Company. The entire CAPEX amount is expected to be funded by internally generated capital if SBP would not resume the subsidized financing scheme for renewable energy which is currently on hold. Incorporating the same, gearing indicators are projected to stay in the same range during the rating horizon. The ratings remain dependent on maintaining healthy financial profile and materialization of diversification benefits from investments undertaken.
For further information on this rating announcement, please contact the undersigned at 35311861-70 (Ext: 201) or Ms. Maham Qasim (Ext: 216) at 042-35723411-13 or email at

Sara Ahmed

Applicable Rating Criteria: Industrial Corporates (May 2023)

VIS Issue/Issuer Rating Scale

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