Jun 06, 2022 (MLN): Interloop Limited (PSX: ILP) has informed that VIS Credit Rating Company Ltd. (VIS), a “Full Service” rating agency, has reaffirmed the “A+/A-1” entity ratings assigned to the company.
The outlook on the assigned ratings is ‘Stable’. A long-term rating of ‘A+’ signifies good credit quality with adequate protection factors. The risk may vary slightly from time to time due to economic conditions, said in its press release issued on June 03, 2022.
The short-term rating of ‘A-1’ indicates high certainty of timely payment and excellent liquidity factors supported by good fundamental protection factors. While the risk factors are minor.
The previous rating action was announced on April 20, 2021.
ILP is a vertically integrated, multi-category apparel company, manufacturing hosiery, denim, knitwear and seamless sportswear, for leading international brands and retailers, in addition to producing yarns for a range textile customers.
The ratings incorporate a leading market position in the hosiery segment which contributes approximately four-fifths of the company’s revenue. ILP is primarily an export-oriented company, with export sales constituting over 90% of total turnover.
The company’s customer base includes major global brands and retailers such as Nike, Adidas, Puma, Target, H&M, C&A, Amazon, Guess, Hugo Boss, Mustang and Uniqlo.
The assigned ratings incorporate a strong governance and control framework, as evidenced by the presence of seasoned professionals on the Board of Directors, an experienced senior management team and an independent audit function. The recovery of industry-wide exports after the easing of CON-ID-19 lockdown measures supports the company’s business risk profile. Established long-term relationships with key customers across all lines of business allow the company to largely pass on increases in raw material prices to customers.
The financial assessment includes sound profitability indicators and a solid liquidity profile. Profitability improved in FY21 primarily due to increased revenue, economies of scale, currency devaluation and operational efficiencies driving higher margins .
Going forward, management expects improved profitability in the context of higher turnover and economies of scale after the expansion. Good cash flow generation resulted in a solid liquidity profile.
Although due to scheduled debt retirement on schedule, overall long-term and short-term debt hedges are expected to remain adequate.
Moreover, despite the continued mobilization of debt for medium-term expansion, debt metrics are expected to remain manageable given the projected equity growth through equity injection and profit retention, he added.
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Published on: 2022-06-06T12:15:17+05:00