Press Release

VIS Reaffirms Entity and Sukuk Ratings of Aspin Pharma (Private) Limited

Karachi, September 30, 2022: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Aspin Pharma (Private) Limited (APL) at ‘A/A-2’ (Single A/A-Two). Rating of APL’s secured Sukuk issue of Rs. 1.5b has also been reaffirmed at ‘A’ (Single A). Long-term rating of ‘A’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short-term rating of ‘A-2’ depicts good certainty of timely payment where liquidity factors are sound and good access to capital markets. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 06, 2021.

Assigned ratings capture APL’s sound sponsor profile, track record of growth and profitable operations and well-established brand value of its leading products. Concentration in product portfolio (top five brands accounting for three-fifth of total revenue), limited therapeutic area coverage and relatively small market share of the company continues to remain the rating constraints. However, the business strategy is aligned to focus towards continuous expansion of product range and therapeutic areas over the rating horizon.

Business risk profile is considered low given non-cyclicality of the sector albeit being a strictly regulated sector and high sensitivity of profitability with changes in exchange rate. Ratings incorporate healthy revenue growth in 2021 driven by higher average selling prices, volumetric growth (organic growth, launch of new products and transfer of OBS SKUs), increased customer coverage and various market penetration initiatives; similar trend is expected to continue going forward through organic growth along with strong new product pipeline. Although gross margins declined in 2021 due to higher raw material prices and elevated shipping costs, net profitability improved on the back of lower finance charges and significant growth in topline in the outgoing year.

Assigned ratings take into account improving cash flow coverages against outstanding obligations on account of higher overall profitability during 2021. However, debt servicing remained constrained in 2021 on account of higher current maturity of long-term debt. The same is projected to improve after repayment of outstanding borrowingsLiquidity profile of the company was supported by short-term investments in mutual funds. Capitalization indicators also depicted improvement attributable to profit retention and timely debt re-payment. With no capex plans in the medium term, capitalization indicators are expected to commensurate with the assigned ratings over the rating horizon.

For further information on this rating announcement, please contact the undersigned (Ext. 306) or Ms. Asfia Aziz (Ext: 212) at 021-35311861-70 or fax to 021-35311873.

Faryal Faheem
Deputy CEO

Applicable Rating Criteria: Industrial Corporates (August 2021)

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