Lahore: PACRA has assigned preliminary ratings to Mughal Iron and Steel Industries Limited's syndicated term finance certificate (TFC) amounting to PKR 2.5 billion. The ratings come as the company navigates a gradually improving economic landscape, marked by declining interest rates, exchange rate stability, and moderating inflation, which have collectively supported a revival in construction activity.
According to The Pakistan Credit Rating Agency Limited, the easing economic pressures in fiscal year 2025 have set a positive trajectory for the construction-linked steel sector. Mughal Iron and Steel Industries has demonstrated resilience by focusing on its ferrous segment, which is expected to drive growth due to projected increases in volume. The company is scaling back its non-ferrous operations because of pricing volatility and regulatory challenges.
Mughal Iron and Steel is also optimizing its operations through the commissioning of a coal-fired power plant under Mughal Energy, aimed at providing competitively priced electricity. This, along with other initiatives, is anticipated to improve gross margins in its ferrous operations. The company plans to issue PKR 5 billion in total, split between a PKR 2.5 billion TFC and a PKR 2.5 billion Sukuk, to optimize its working capital and bolster its liquidity profile. The ratings reflect the instrument's security structure and credit enhancement features, while remaining sensitive to the company's ability to meet projected volumes, sustain margins, and manage its financial profile effectively.
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