PACRA Assigns Initial Entity Ratings to Texo Poly Industries (Pvt.) Limited

The ratings reflect Texo Poly Industries (Pvt.) Limited's ("Texo Poly" or the "Company") established position in Pakistan's plastic packaging industry, underpinned by its diversified product portfolio. The Company also benefits from recurring relationships with a well-established customer base, which provide stability to its revenue stream and support its competitive positioning. Texo Poly is a wholly family-owned enterprise whose sponsors possess extensive industry experience and technical expertise, enabling the Company to establish a reputable position in the domestic flexible packaging market. The Company manufactures a broad range of flexible plastic packaging products, with polythene products contributing the largest share of revenue. Demand is primarily driven by the FMCG, fertilizer, chemical, wheat, and rice sectors; however, the business remains exposed to fluctuations in exchange rates and international polymer prices due to its reliance on imported raw materials. Following relatively soft polymer prices during CY25, the subsequent increase in global crude oil prices and freight costs exerted pressure on input costs and compressed margins. Despite these challenges, Texo Poly maintained a sound operational profile, with capacity utilization improving in FY25 compared to the preceding year, reflecting better absorption of available production capacity and sustained operating activity. Operational efficiencies have also been strengthened through the implementation of SAP Business One and the commissioning of a 1.5MW solar power plant, which is expected to improve cost efficiency over the medium term. The Company’s total assets increased by 15.8% in FY25 compared to FY24, while equity recovered to PKR 1.2bln from PKR 1.1bln in FY25 following an improvement in profitability. The Company maintained a positive growth trajectory, with revenue recording an increase in FY25 over the preceding year, while the growth momentum continued into 9MFY26. Gross margin contracted sharply to 2.3% (FY24: 3.9%, FY23: 10.7%) due to elevated raw material costs, PKR depreciation, and limited pricing flexibility, while net profit margin stood at 1.4% in 3MFY26 (-0.8% in FY25). The Company's leverage moderated significantly to 3.3% as of 9MFY26 from 20.7% in FY25 (FY24: 6.8%), supported by lower borrowings and improved equity. Debt servicing capacity remained adequate, with EBITDA-to-finance cost coverage standing at 33.3x in FY25 (FY24: 38.3x). Working capital metrics remained stable, with the net working capital cycle maintained at around 65 days, reflecting prudent inventory and receivable management.
The ratings are dependent upon the Company's ability to maintain its operational performance amid raw material price and exchange rate volatility. Prudent working capital management, adequate liquidity, and a sound capital structure will remain important rating considerations. The Company's diversified blue-chip customer base and experienced sponsors provide comfort to the ratings, while the successful execution of the planned capacity expansion will remain a key consideration.

About the Entity
Texo Poly Industries (Pvt.) Limited was incorporated in Pakistan in 2015 as a private limited company. The Company is a family-owned business, with ownership concentrated among the founding family members under a formal Shareholders’ Agreement executed on May 15, 2015. The current shareholding comprises Mr. Malik Ahsan Younas, Chief Executive Officer, as the largest shareholder, and Mr. Usman Malik, Managing Director, as the second-largest shareholder, while other family members hold adequate shareholdings. The sponsors remain actively involved in the Company’s strategic direction and day-to-day operations, providing continuity in leadership and decision-making.