PACRA Maintains the Entity Ratings of Yunus Textile Mills Limited

The rating of Yunus Textile Mills Limited (“YTML” or “the Company”) derives its rationale from the Company's excellent performance. YTML has reported record-high profits, reflecting positively on its business risk profile. While many of the large textile players faced challenges in terms of sustaining margins, YTML displayed higher performance in its core business. This was further supplemented by the other income stream. The ratings, among other factors, reflect the sponsor’s well-established and diverse business profile spread across three verticals: Textile, Energy and Real Estate within the country’s economy. Yunus Brother Group (YBG) operates with a vision to prosper through continuous diversification, innovation, and localization, aiming to improve the quality of life by setting new standards in integrity and philanthropy to create a lasting impact on society. YTML is considered the flagship Company of one of the largest textile conglomerates. It is a vertically integrated unit encompassing all aspects of the textile value chain from spinning to made-ups. The Company specializes in a broad range of home textile products, including comforter sets, duvet sets, coverlets/quilts, sheet sets, shower curtains, window curtains, and decorative pillows. A predominant portion of the Company’s revenue is generated from exports at PKR 75.8bln (FY23: 66.3bln). In volumetric terms, YTML’s top-selling product is made-ups, followed by finished fabric, grey fabric, and yarn. Made-ups hold an apex position in the business valuation matrix of YTML. The Company’s prime export destination is the USA, which accounts for a significant portion of the Company’s total revenue, indicating geographical concentration risk. In cognizance of this, the management has strategically expanded its business portfolio towards the European market over the past few years. The management anticipates that the impact of the flat 29.0% US reciprocal tariff would be limited, supported by the Company’s long-term ties with top international clientele around the globe. Moreover, it presents an opportunity to capture market share in high-tariff international regions. The installation of ~33.85 megawatt solar and wind turbines has comforted the GP margin via optimizing escalated energy cost risk. Dividend income generated from the strategic investment portfolio and short-term placements in money market mutual funds has augmented the Company’s profitability. Despite an elevated taxation depicting the industry norm, the Company's PAT stood at PKR 16.0bln in FY24, relatively higher than peers, compared to PKR 14.0bln in FY23. The Company fuels its working capital requirements through internally generated cash flows, which have beefed up the coverages. The financial risk profile is considered strong, with a well-managed working capital cycle coupled with a low-leverage capital structure demonstrating ample borrowing capacity. Going forward, the management seeks to drive further growth by preserving its core operations and maintaining its steadfast client ties.
The ratings are dependent upon the intact business operations under the current economic conditions and draw comfort from the sponsor’s profile. Improvement in margins, maintenance of coverages and cashflows at an optimal level while expanding business volumes remains critical.

About the Entity
YTML, a public unlisted Company incorporated in 2007, is a wholly owned subsidiary of YB Holdings (Private) Limited operating under the umbrella of the Yunus Brother Group. The Company is engaged in the manufacturing and export of knitted, weaved grey, fabrics and stitched textile articles. The Company's board comprises eight members, chaired by Mr. Muhammad Ali Tabba.