Press Release

VIS Credit Rating Company Reaffirms Entity Ratings to Lucky Textile Mills Limited

Karachi, December 28, 2021: VIS Credit Rating Company Limited has reaffirmed entity ratings of Lucky Textile Mills Limited (LTML) at ‘AA-/A-1’ (Double A Minus/A-One). Long Term Rating of ‘AA-’ denotes 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 ‘A-1’ signifies high certainty of timely payment; liquidity factors are excellent and supported by good fundamental protection factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action announced on November 10, 2020.

Assigned ratings take into account strong sponsor profile as the company is wholly owned subsidiary of Y.B. Holdings (Private) Limited, which is a leading conglomerate in Pakistan having strong financial profile and diversified presence in sectors including power generation, building materials, real estate, textile, chemicals, pharmaceuticals, food, entertainment and automotive sectors. Ratings encapsulate strong financial risk profile and diversified investment portfolio that continues to support net profitability of the company. Positive momentum in exports of value-added segment on account of recovery in international markets, gradual establishment of international customer base amid COVID-19 recovery phase, and export-oriented policies of the government also supports the business risk profile of the company. Lucky Textile Mills Limited is undertaking business integration and capacity addition which is expected to improve operational efficiency and in turn margins, going forward.

Assessment of financial profile incorporates volume driven export revenue growth in FY21. Gross margins depicted slight decline owing to increase in yarn prices, however net margins and profitability exhibited increase on account of sizeable increase in share of profits from associates. Cash flow coverages including debt servicing continued to remain strong. Liquidity profile also remains sound. Furthermore, capitalization indicators remained low due to increase in equity base. Gearing and leverage levels are expected to depict increase for financing capex going forward, albeit remaining within comfortable levels on account of projected profitability. Going forward, sustained profitability and maintenance of gearing and leverage ratios at current levels will be important for assigned level of ratings.

For further information on this rating announcement, please contact Ms. Sara Ahmed (Ext: 207) or the undersigned (Ext: 306) at 021-35311861-66 or email at info@vis.com.pk.



Faryal Ahmad Faheem
Deputy C.E.O.

Applicable Criteria: Industrial 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 .