PACRA Maintains Entity Ratings of Ibrahim Fibres Limited

Ibrahim Fibres Limited (“IFL” or “the Company”) is primarily engaged in the manufacturing and sale of Polyester Staple Fibres (PSF) and Yarn. The company's ratings reflect its long-standing presence in the industry, underscoring a commitment to innovation and technological excellence. Equipped with state-of-the-art machinery, IFL produces high-quality fibers through its vertically integrated operations, which include Polyester Plants and Textile Spinning Plants. These operations are supported by in-house power generation facilities utilizing HFO, gas, coal, and solar. IFL has a robust production capacity, with an annual output of 390,600 tons of PSF and 240,192 spindles for spun yarn, reinforcing its position as a key player in Pakistan’s textile industry. The company dominates the country’s PSF market with a commanding 73% share, followed by Lucky Core Industries (24%) and Rupali Polyester (3%). In CY24, Pakistan’s PSF industry experienced modest volumetric growth of approximately 5%, reaching 606,615 MT. However, the local PSF industry faces a significant challenge from the influx of competitively priced imported PSF, which has pressured margins and reduced capacity utilization for domestic manufacturers. Consequently, local PSF production declined by approximately 11%, standing at 343,127 MT, while imported PSF saw a substantial increase, reaching 268,488 MT compared to 193,693 MT last year. During 9MCY24, IFL reported revenue of ~PKR 91bln, reflecting a slight annualized growth of 1.4%, primarily driven by price inflation. However, PSF sales volumes declined by 5%, while yarn volumes remained stable. The company’s gross and operating margins remained stagnant at ~7.7% and ~5%, respectively, with net margin showing slight improvement due to a reduction in borrowing costs. To navigate industry challenges, IFL remains committed to enhancing cost efficiency through Balancing, Modernization, and Replacement (BMR), process automation, and strategic capital expenditures. The company prioritizes customer loyalty by implementing timely price adjustments to mitigate market fluctuations and maintain strong partnerships. Expansion plans will be primarily funded through internally generated cash flows. IFL maintains a strong financial risk profile, characterized by solid coverage ratios and robust cash flows. Its capital structure remains low-leveraged, with short-term borrowings allocated for working capital needs and long-term borrowings dedicated to capital expenditures. Additionally, the company benefits from its association with the Ibrahim Group, which has demonstrated strong financial support and stability.
The ratings depend on the Company’s ability to maintain its position in the local PSF industry while achieving topline growth and increased profitability amid a challenging business environment. Efficient capacity utilization and the resulting improvement in margins will be key factors in sustaining its financial strength.

About the Entity
Ibrahim Fibres Limited, incorporated in 1986 and listed on Pakistan Stock Exchange, is engaged in the production & marketing of PSF and yarn. Its production facilities are located at Shahkot near Faisalabad. Ibrahim Group holds majority stake (~91.80%) in Ibrahim Fibres through Group holding entity, Ibrahim Holdings (Private) Limited. The Company’s Board of Directors comprises seven members, including the Chairman, Mr. Sheikh Mukhtar Ahmed and CEO, Mr. Mohammad Naeem Mukhtar. The remaining members comprise three Ibrahim Group affiliates and two independent members. All Board members have significant industry-related experience.