Press Release

VIS Maintains Entity Rating for The Imperial Electric Company Pvt Ltd

Karachi, January 27, 2025: VIS Credit Rating Company Limited (“VIS”) maintains the entity ratings of The Imperial Electric Company Pvt Ltd (“IEC” or “the Company”) at A-/A2 (Single A Minus/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 'A2' suggests good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned rating has been changed from ‘Positive’ to ‘Stable’. Previous rating action was announced on January 31, 2024.

The Imperial Electric Company (Pvt.) Limited is situated in Lahore and specializes in producing and installing diesel generators, along with offering after-sale services. IEC is also involved in providing low-voltage electrical components, lighting products, and airfield lighting systems for the aviation industry. The Company has significant presence in the industry due to its comprehensive electrical solutions to renowned telecom service providers and other private institutions.

Assigned ratings incorporates the business risk profile of the Company, characterized by its strong market presence in the electrical equipment manufacturing industry of Pakistan. Competition within the local industry and with imported Chinese products is at moderate level. Moreover, IEC's recent expansion into the solar segment further enhances its competitive profile.

In FY24, IEC achieved an 8% YoY growth in net sales, driven by easing of import restrictions, improved components availability, and strong performance in the LV electrical components segment, complemented by revenues from solar contracts. With a healthy order book valued at PKR 5 billion, including major projects with airports in Lahore and Karachi and defense contracts, IEC expects 25-30% sales growth in FY25. Gross margins reached a record 28.9% (FY23: 21.9%) in FY24, and net margins improved to 12.1% (FY23: 7.2%), supported by a better sales mix, investment profits, and operational efficiencies. While 1HFY25 margins dipped slightly due to higher costs, though remaining above FY23 levels, with further improvement expected with growth in sales.

IEC's had adequate liquidity in FY24 with improvement in the current ratio to a record of 2.86x at the end of FY24 (FY23: 1.99x, FY22: 2.35x). Profitability declined during the first half of FY25, which placed pressure on liquidity as evidenced by a substantial decrease in Funds from Operations (FFO) compared to FY24 levels. This deterioration in financial metrics led to a revision in the ratings outlook from Positive to Stable. The ratings will be sensitive to improvement in profitability and liquidity metrics. The Company has maintained a conservative capitalization profile, gradually reducing reliance on short-term debt. By the end of 1HFY25, gearing and leverage ratios improved to 0.17x (end-FY24: 0.37x, end-FY23: 0.62x) and 0.39x (end-FY24: 0.18x, end-FY23: 0.34x), respectively. Moving forward, improvement in cashflows and debt coverages amid expected increase in revenue supported by healthy order book will be important for the assigned ratings.

For further information on this ratings announcement, please contact on 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 .