The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Upgrades Entity Ratings of Nishat Hotels and Properties Limited

Rating Type Entity
(07-Jun-24 )
(16-Jun-23 )
Action Upgrade Maintain
Long Term A A-
Short Term A1 A2
Outlook Stable Positive
Rating Watch - -

Nishat Hotels & Properties Limited (NHPL or the Company) holds a prominent position in Pakistan's hospitality and real estate sectors. Under the brand name of Nishat Emporium, the Company owns and manages a shopping mall, alongside a hotel and banquet halls operating under the brand “Nishat Hotel”. In 2020, NHPL ventured into residential development with their 'Nishat Residences' brand, featuring a project comprising 77 luxury apartments. The ratings take comfort from the Company’s association with Nishat Group, one of the leading business conglomerates in Pakistan. According to the “World Tourism Barometer” published by the World Tourism Organization, Pakistan experienced a 92% growth in foreign visitors in the first nine months of 2023, indicating a positive trend compared to pre-pandemic levels. Pakistan's hotel and retail industry is experiencing growth due to factors like rising consumer spending, urbanization, and improved infrastructure. This has led to domestic and international hotel chains expanding their properties to meet the growing demand for quality accommodations in luxury, business, and budget segments. Aligned with prevailing trends in the hospitality industry, the Company's performance indicators, including occupancy levels, average daily room rates, and utilization of banquet halls, demonstrated improvements during 9MFY24, leading to a ~20% increase in revenue. Going forward newly developed revenue streams within this segment will further supplement the revenue growth. On the Emporium Mall front, the Company successfully attained full occupancy, leasing out all rentable areas, and achieved ~12% revenue growth. Similarly, under the brand of Nishat Residencies, ~ 57 apartments have been sold which is considered a significant milestone. The Company has benefited from a strong governing board, and operations draw support from skilled and professional management. The financial risk profile of the Company is considered adequate with comfortable coverages, cash flows, and working capital cycle. Capital structure is moderately leveraged where borrowings are comprised of long-term only.
The ratings are dependent upon the sustainability of operations amid changing business environment and inflationary pressures, and consistent improvement in all segments of revenue & margins. Cash flows from the sale of apartments are vital to improve the debt coverage. Consistency in the performance indicators as illustrated in the financial projections, will continue to be paramount.

About the Entity
Nishat Hotels & Properties Limited is a venture of Nishat Group - the country's leading business group having strong credentials in managing ventures in the textile, cement, energy, hospitality, and financial sectors etc. The Company is owned by sponsors of Nishat Group; the Mansha family and associated companies. The Company’s seven-member board of directors comprises four representatives of the sponsoring family along with three executives from group companies. Mr. Hassan Mansha, the CEO, is the leading person, engaged in multiple ventures of the group.
Emporium mall sprawls across an area of 15 acres and comprises an eleven-story hotel with ~198 hotel rooms, a shopping mall consisting of 198 shops and 116 Kiosks, a food court catering to over 30 international and local chains, a multiplex cinema of 9 screens, 9 banquet halls and 7 board rooms with a combined capacity of over 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.