Analyst
Silwat Malik
silwat.malik@pacra.com
+92-42-35869504
www.pacra.com
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Related Research
PACRA Maintains Entity Ratings of Nishat Hotels and Properties Ltd
Rating Type | Entity | |
Current (28-Jun-19 ) |
Previous (27-Dec-18 ) |
|
Action | Maintain | Maintain |
Long Term | A- | A- |
Short Term | A2 | A2 |
Outlook | Stable | Stable |
Rating Watch | - | - |
Nishat Group, through Nishat Hotels & Properties Limited, has set up a project comprising a state of the art shopping mall, a luxury hotel and banquet halls. The ratings reflect the Company's association with Nishat Group, one of the leading business conglomerates of Pakistan, and expected group support. With the mall operating at full capacity, the Company’s main focus is now on increasing occupancy rates from hotel operations. Here, expansion and change in management are expected to have positive results. Although the Company maintains profitable operations, it has yet to completely turn around and generate a positive bottom-line. Financial profile remains stretched due to high leveraging, large repayments and weak coverages. Adequate financing facilities provide some cushion to meet payments in a timely manner. Increase in borrowings and rising interest rates would further suppress coverages, exerting pressure on the Company. Ratings take comfort from demonstrated group support.
Increasing cashflows from hotel operations and operating the mall at optimal capacity are imperative. Timely arrangement of financing to repay obligations is crucial. Any significant deterioration in this and/or margins leading to lower cashflows will have a negative impact on ratings. Meanwhile, given sizable leveraging and debt obligations, group support remains critical for the ratings.
About
the Entity
Nishat Hotels & Properties Limited is a venture of Nishat Group - the country's leading business group having strong credentials of managing ventures in the textile, cement, energy, hospitality and financial sectors. The Company is majority owned by Mansha family (90%), the sponsors of Nishat Group. The other shareholder is Allied Bank Limited (10%). The Company’s seven board of directors comprises four representatives of the sponsoring family along with three executives from group companies. Mr. Hassan Mansha, the CEO, is leading power and hospitality ventures of the group.
Emporium mall, one of the biggest mall's in Pakistan, sprawled across an area of 15 acres, comprises a twelve storey hotel with ~198 rooms, a shopping mall of 140 shops, a food court catering 30 international and local chains, a multiplex cinema of 9 screens, 6 banquet halls with a combined capacity of 5,000 people and a parking space of 2,000 cars.