The Pakistan Credit Rating Agency Limited
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Raniya Tanawar

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PACRA Maintains Entity Ratings of Nishat Hotels and Properties Limited

Rating Type Entity
(25-Jun-21 )
(27-Jun-20 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch Yes Yes

Nishat Group, through Nishat Hotels & Properties Limited (‘NHPL’ or 'the Company'), has set up a project comprising a state of the art shopping mall, a luxury hotel, banquet halls and residential apartments. The ratings reflect the Company's association and strong support from Nishat Group, one of the leading business conglomerates of Pakistan. With the mall and the hotel operating at maximum possible capacity due to COVID-19, the Company’s main focus is operational sustainability in these challenging times. Occupancy in the hotel and mall footfall remained fluctuating since certain level of restrictions continued in order to curtail virus spread. Uncertainty prevails on account of third/fourth wave, making it difficult to determine when operations achieve optimum level. As per a group level strategic move another Nishat Group company namely, Nishat (Gulberg) Hotel and Properties Limited (“Nishat Residences”) has been merged with NHPL. This will boost company’s revenues in the near future. Furthermore, the financial profile continued to be stretched due to moderate leveraging - post debt consolidation - and adequate coverages. The financial risk profile witnesses some respite particularly on the back of Government and SBP given initiatives that provided much needed support, predominantly interest rate cut will provide relief to cashflows as debt servicing burden lessens. The ratings take comfort from demonstrated group support and commitment (capital injection from sponsors).
Post Lockdown, varying footfall and occupancies will remain key challenges for the industry. PACRA monitors the changing business dynamics and will take rating action accordingly. Maintaining cashflows from hotel operations and operating the mall at optimal capacity amid Covid-19 outbreak remains imperative. Future cashflow prospects with respect to the sale of apartments is vital. Interest saving will help in maintaining the cash flow of the Company, however, margins remained subdued. Meanwhile, given sizable leveraging, 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 owned by sponsoring family of Nishat Group; Mansha family and associated companies. The Company’s seven member’s 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, financial and hospitality ventures of the group.
Emporium mall sprawls across an area of 15 acres, comprises an eleven storey hotel with ~198 hotel rooms, a shopping mall consisting of 195 shops and 89 Kiosks, 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 2,500-3000 cars.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.