Press Release

VIS Maintains Entity Ratings of Hi-Tech Lubricants Limited

Karachi, November 28, 2022: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Hi-Tech Lubricants Limited (HTL) at ‘A/A-2’ (Single A/A-Two). The medium to long-term rating of ‘A’ denotes good credit quality, with adequate protection factors. Moreover, risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ denotes good certainty of timely payment coupled with sound company fundamental and liquidity factors. Outlook on the assigned rating has been revised from ‘Positive’ to ‘Stable’. The previous rating action was announced on December 03 2021.
The assigned ratings incorporate high to medium business risk profile of the company underpinned by subdued demand of petroleum products due to elevated fuel prices and the associated supply constraints across the globe. Comfort is drawn from diversified revenue base with the company operating in the lubricants segment which offers a relatively favorable competitive landscape and sound market presence.

Assessment of financial risk profile for FY22 incorporates growing topline attributable to higher revenue from OMC segment on the back of enhancement in the scale of operations along with price increases in both segments. Due to growing share of OMC business in the sales mix and associated lower margins, gross margins of the entity have reduced on a timeline basis. However, with operating expenses growing in line with revenue and higher dividend income from the subsidiary ensured an improvement in the overall profitability for FY22. Profitability profile of the Company remained under pressure in Q1FY23 due to subdued market dynamics across the globe and Pakistan in particular, with the Company reporting loss amounting Rs. 101m. Improving the same over the remaining part of the year is considered important in view of extended working capital cycle posing higher burden of financial charges on the profitability as well as liquidity profile. Leverage levels have increased on a timeline basis, albeit remain within manageable levels. Going forward, improvement in margins and maintenance of capitalization profile will remain key rating sensitivities.


For further information on this rating announcement, please contact Ms. Asfia Aziz (Ext: 212) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk.


Sara Ahmed
Director

Applicable rating criterion: 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 .