Press Release

VIS Reaffirms Entity Ratings of Fast Cables Limited

Karachi, November 30, 2021: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Fast Cables Limited (FCL) at ‘A-/A-2’ (Single A Minus/A-Two). The medium to long-term rating of ‘A-’ signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy. The short-term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 28, 2020.

The ratings assigned to FCL take into account its recognized franchise value and market share in the electrical cable business. Business risk profile is characterized by relative economic recovery post pandemic crisis, improved prospective of construction & housing sectors and high competition from the unorganized segment and imports. However, overall business risk profile is supported by stable and growing demand for wires & cables in the medium to long-term. The ratings derive strength from dependence of the power sector on the company’s products used during transmission and distribution of electricity. Albeit, inherent business risk pertaining to volatility in raw material prices and rupee depreciation is considered manageable, the same remains an important factor for the ratings. Further, the ratings incorporate sizable growth in sales emanating from improved market penetration in industrial & commercial segments coupled with securing business from government and semi-government contracts.

The ratings factor in financial risk profile emanating from sound liquidity profile, margins and debt coverages coupled with augmented equity base. The ratings incorporate ongoing capex for backward integration and value addition in manufacturing operations and resulting projected improvement in topline and margins owing to cost-efficiencies post capex completion. The ratings take comfort from equity injection made by sponsors during the rating review period. In addition, positive demand prospects of the power sector are considered to be among the rating drivers. The ratings reflect increase in leverage indicators in the outgoing year owing to higher working capital requirements amid growth in scale of operations; the same continue to remain on a higher side in comparison to peers. Going forward, projected increase in leverage indicators arising from planned procurement of long-term debt for financing the capital expenditure is considered a key rating sensitivity.

For further information on this rating announcement, please contact Ms. Maham Qasim (042-35723411-13, Ext. 8010) and/or the undersigned at 021-35311861-66 (Ext. 201) or email at info@vis.com.pk .



Faryal Ahmad Faheem
Deputy CEO

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 2021 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .