PACRA Upgrades Entity Ratings of New Horizon Computer

New Horizon Computer ('the Business') is a growing IT solutions provider in Pakistan, established in 1999. Starting from a single-room office in Karachi, it has expanded to over 300 professionals across multiple cities, including Lahore, Islamabad, and others. New Horizon offers a range of IT services and products including virtualization (VMware, Microsoft, Citrix), enterprise systems, archiving systems, converged networks, Communication equipment, power & backup services, and technology licensing. The ratings upgrade for New Horizon Computer ('the Business') is underpinned by the Company's ability to sustain its financial performance and operational efficiency. The ratings upgrade is also supported by its diverse range of clients, which includes Financial Institutions, Oil & Gas Companies, Educational institutions, and Government & NPOs. The Business became Pakistan's first VMware premier partner, showcasing its expertise in virtualization solutions. The Business benefits from the strategic and stable leadership of Mr. Rahim Iqbal. As an Association of Persons (AOP), there remains scope for enhancement in the Business’s governance framework and financial reporting practices. On the financial front, the Business exhibited substantial topline expansion, registering an ~18% year-over-year increase. This positive trajectory was primarily fueled by improved sales performance, highlighting positive market traction and demand for its offerings. The Business exhibited a positive margins trajectory. Gross Profit Margin demonstrated a 5% expansion, primarily driven by effective raw material cost management initiatives. This positive development contributed to an improvement in Operating Profit Margins. However, Net Profit Margins experienced a contraction, primarily attributable to an increase in finance costs. The financial profile of the Business reflects an improvement in the working capital cycle, indicative of enhanced operational efficiency. Coverage metrics have experienced a modest contraction, primarily attributable to heightened finance costs, indicating a slight moderation in debt-servicing capacity. Consequently, the overall coverage position of the Business remained stable. A reduction in borrowings during FY24 led to a strengthening of the Business's leverage profile. With a growing youth population, increasing internet penetration, and a thriving startup ecosystem, Pakistan is poised to become a significant player in the digital economy and achieve the goal of national growth and prosperity. From July 2023 to June 2024, Pakistan’s IT exports reached $3.223bln, compared to $2.596bln in the same period of the previous financial year. The IT industry is striving to increase IT exports with the full support of the SIFC (Special Investment Facilitation Council), IT ministry, and Pakistan Software Export Board. The present coalition government is paying special attention to information technology (IT) and has earmarked over Rs79 billion for it in the 2024-25 budget, the highest allocation in the country’s history.
The ratings are dependent on the management's ability to diversify the revenue stream by global outreach along with stabilizing margins and profitability. However, improving the financial profile of the Business remains crucial. Meanwhile, strengthening governance practices will have a positive impact on the ratings. Any deterioration in debt coverages leading to higher financial risk or substantial losses will have a negative impact on ratings.

About the Entity
New Horizon Computer ('the Business') is an association of persons (AoP). The Business was registered in 2003, and is owned by Mr. Hanif Akbar Ali (~51%) and Mr. Rahim Iqbal (~49%, CEO). The primary business activity involves the provision of IT-based solutions. The management team comprises qualified professionals having significant experience in their respective fields.