Karachi, VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Zaman Textile Mills (Private) Limited (ZTML) at 'A-/A-2', reflecting good credit quality and a stable outlook despite the textile sector's prevailing economic challenges. The medium to long-term 'A-' rating signifies adequate protection factors, while the 'A-2' short-term rating underscores the company's sound liquidity and fundamentals.
According to VIS Credit Rating Company Limited, the ratings reflect ZTML's resilience in a challenging macroeconomic environment characterized by high-interest rates, inflation, escalating raw material costs, and a global demand slowdown. These conditions have historically impacted the textile sector's margins and growth prospects. Nonetheless, ZTML's financial risk profile benefits from its improved topline and operational margins, notably in the weaving segment, along with inventory gains during FY23 and the first half of FY24.
The assessment acknowledges ZTML's robust operational cash flows and sponsor support, counterbalancing increased debt utilization and a competitive industry backdrop. Although the company faces pressure on its coverage profile due to financial burdens, its liquidity position aligns with the stable rating outlook. Future ratings will hinge on ZTML's capacity to uphold its profitability, capitalization, and liquidity in alignment with the ratings, alongside ongoing sponsor backing.
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