PACRA Maintains the Entity Ratings of Nishat Mills Limited

Nishat Mills Limited (“NML” or “the Company”) is a prominent and well-established player in Pakistan’s textile industry. NML operates as a fully integrated textile powerhouse, with operations spanning from high-end spinning to finished products. The Company is guided by a vision to lead the industry by safeguarding shareholders’ interests, serving the community, and contributing meaningfully to the country’s economy. Over the years, the Company has expanded its operational scale by venturing into promising segments, strengthening its presence in value-added products.

In 1HFY26, the Company achieved a topline of PKR 86.9bln (1HFY25: PKR 89.4bln). While volumetric offtake remained favorable, margins came under pressure due to elevated production costs and geopolitical uncertainties, limiting pricing flexibility in export markets. This, however, was partially offset by the non-core income generated from surplus funds deployed in the capital market and strategic investment portfolio. The monetary easing led to a notable reduction in finance costs, supplementing the overall profitability. As a result, the Company secured the PAT of PKR 3.3bln (1HFY25: PKR 4.1bln).

The Company has sizeable working capital requirements to support its integrated operations, resulting in an extended cash conversion cycle. This led to elevated inventory levels, primarily due to strategic upfront cotton procurement. This reflects a seasonal peak witnessed throughout the industry and is expected to improve in the coming quarters. NML maintains a sound financial risk profile. Its funding mix is a blend of internally generated cash flows and short-term borrowings. Coverage metrics of the Company remain within a manageable range, while liquidity indicators are well-managed, underpinned by significant holdings of marketable securities.

The Company continues to undertake initiatives for product diversification, while maintaining operational efficiency and its commitment to the ESG framework. During the period under review, the Company executed a BMR for the installation of new energy-efficient looms in its weaving segment. As of today, approx. 42.99MW of solar project is operational, mitigating the impact of rising energy costs. Going forward, the management plans to invest in a high-potential corduroy project and solar battery storage systems to further strengthen its sustainability profile.
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The ratings are dependent on the Company's ability to sustain business growth while generating sufficient cash flows and maintaining sound credit quality metrics. The adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings.

About the Entity
Nishat Mills Limited operates as a publicly listed Company. NML serves as the flagship entity of the renowned Nishat Group. The sponsoring group carries a strong legacy of operational excellence and a well-established market presence. Its extensive footprint spans multiple sectors, including cement, power, insurance, trading, automobile, textile, agriculture & dairy, real estate, hospitality, and financial services. The Company’s majority stake (~51%) is owned by the Mansha family through individuals and group companies. The board comprises seven members with two directors representing the sponsoring family, including the Chairman, Mr. Hassan Mansha and the CEO, Mr. Umer Mansha.