Press Release

VIS Maintains Entity Ratings of Agha Steel Industries Limited

Karachi, December 21, 2023: VIS Credit Rating Company Limited maintains entity ratings of Agha Steel Industries Limited ('ASIL' or 'the Company') to 'A/A-2' ('Single A'/'A-Two'). Medium to long term rating of 'A' indicates good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. Short term rating of 'A-2' indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Outlook on the assigned ratings have been changed to 'Stable' from 'Negative'. Previous Rating action was announced on December 13, 2022.
Agha Steel Industries Limited was established in Pakistan on November 19, 2013, as a private limited company. On April 07, 2015, ASIL transitioned to a public limited company. The Company was listed on the Pakistan Stock Exchange through an IPO in November 2020. The central operation of ASIL’s business is focused on the production and sale of steel bars, wire rods, and billets. The Company's registered office and manufacturing facilities are located at Port Qasim Authority, Karachi.
Assigned ratings incorporate a high business risk profile within the long steel industry. This is attributed to the industry's exposure to cyclicality and intense competition. Despite these challenges, ASIL's technological advantage provides a level of support to the ratings.
Assigned ratings also consider the financial risk profile of ASIL. In FY23, the Company faced a contraction in the market due to macroeconomic constraints, leading to reduced demand and lower capacity utilization. However, ASIL managed to achieve healthy gross margins through operational efficiencies with its technological efficacy. The ongoing technological advancements, including the Electric Arc Furnace (EAF) and Mi. Da. Rolling project, contribute to ASIL's operational strengths. The capitalization profile remains adequate, with slight pressure expected from the upcoming issuance of a green bond. Liquidity and coverage profiles, while having experienced deterioration in FY23, recovered to adequate levels by 1QFY24.
Going forward, ratings will remain sensitive to the management's ability to achieve its projected plans. Moreover, improvement of key financial metrics such as capitalization, coverage and liquidity to be commensurate with assigned ratings will also be important consideration for future reviews.
For further information on this ratings announcement, please contact Mr. Saeb Muhammad Jafri (Ext: 202) or the undersigned (Ext: 201) at 021-35311861-64 or email at info@vis.com.pk.






Javed Callea
Advisor


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

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