Press Release

VIS Maintains Entity Ratings of Novatex Limited

Karachi, March 20, 2025: VIS Credit Rating Company Limited (VIS) maintains entity ratings of Novatex Limited (‘Novatex’ or ‘the Company’) at AA/A1+ (Double A/A One Plus). Medium to long term rating of 'AA' indicates High credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Short term rating of 'A1+' indicates strongest likelihood of timely repayment of short-term obligations with outstanding liquidity factors. Outlook on the assigned ratings has been revised from ‘Positive’ to ‘Stable’. Previous Rating action was announced on February 22, 2024.

Novatex is a part of the Gani & Tayub (G&T) group, and a leading manufacturer of PET resin, PET preforms, RPET, and BoPET films used across industries like packaging, bottling, pharmaceuticals, and automobiles. The company has diversified into power generation through Thalnova Power Thar (Private) Limited.

Assigned ratings incorporate the business risk profile, which is assessed as medium to low. Demand cyclicality is influenced by seasonality within the beverage industry, while overall sensitivity to economic cycles remains low due to stable demand from the FMCG and beverages sectors. Competitive dynamics are shaped by the presence of domestic and international market participants, with moderate barriers to entry due to substantial capital investment requirements. Growth trends are influenced by global packaging demand and the shift towards sustainable materials. Energy sensitivity remains a key consideration, given the energy-intensive nature of PET production and its exposure to variations in energy costs and supply reliability. Novatex’s market presence is supported by long-term supply contracts with key beverage industry participants, ensuring consistent demand and revenue stability. These agreements reinforce its position as a reliable supplier, mitigating exposure to market fluctuations. In FY24, geopolitical factors also impacted demand for some of its products through the emergence of local brands partially offset the impact for Novatex.

Assigned ratings also incorporate the financial risk profile of the Company, which remains healthy despite some weakening in the outgoing year. Profitability was lower due to higher raw material costs, increased fuel and power expenses, and an elevated financial burden arising from higher debt levels and interest rates. Debt levels increased due to continued expansion and elevated working capital requirements, leading to higher gearing and leverage ratios and reduced funds from operations. Nevertheless, key financial metrics remain commensurate with the assigned ratings.

Going forward, ratings will remain sensitive to the Company’s ability to maintain its market position and mitigate demand fluctuations amid evolving competitive dynamics. Energy cost volatility and supply reliability will remain key considerations, given their impact on operational efficiency. Maintenance of adequate debt coverage, liquidity buffers, and capital structure remain important for ratings.

For further information on this rating 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 2025 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .