PACRA Maintains Entity Ratings of National Foods Limited

The assigned ratings of National Foods Limited ("NFL" or "the Company") reflect the Company's dominant market position, sustained operational performance, and demonstrated capacity to diversify and innovate within its chosen segments. Founded in 1970, NFL has evolved into Pakistan's foremost food solutions company with a presence across 11 product categories and approximately 280 SKUs, underpinning a durable and expanding business franchise. The ratings are driven by NFL's expanding operations, fueled by rising sales volumes and successful new SKU introductions, alongside strong brand equity that supports effective navigation of both domestic and international markets. The Company's robust governance and organizational structure provide sound strategic oversight of its operations and investments — including its international subsidiaries — reinforcing confidence in management's capacity to execute its long-term vision. During FY25, the international business has grown to represent over 50% of consolidated group revenue. Realigning the investment footprint, the Company executed the divestment of approximately ~50.5% of its shareholding in A-1 Cash & Carry (A-1), a Canadian grocery retail chain acquired in 2017.
National Foods has demonstrated robust growth in its top line, recording an approximate 19.3% increase during FY25, reaching ~PKR 44.6bln (FY24: PKR 37.7bln, 2QFY26: ~PKR 22.0bln), driven by both price adjustments and increased sales volume. The Company's gross margin expanded from 31.7% in FY24 to 35.5% in FY25, as revenue growth of 20.3% significantly outpaced COGS growth of 12.6%. Additionally, declined finance costs contributed to a significant increase in the profitability (FY25: PKR 3.1bln, FY24: PKR 1.3bln, 2QFY26: PKR 2.5bln). The ratings are reinforced by the NFL's formidable franchise value. The Company commands market leadership in five product categories in Pakistan — Recipe Mixes, Ketchup, Pickles, Salt, and Jams & Jellies — and has consistently leveraged this brand equity to extend into adjacent categories. NFL's state-of-the-art National Centre of Excellence (NCOE) serves as the R&D engine for continued product innovation. The NFL’s credit profile is anchored by fiscal prudence and disciplined market adaptability.
The ratings are dependent on the management’s ability to maintain margins while ensuring self-sufficiency. Diligent management of working capital, along with the preservation of adequate cash flows and coverage ratios, is crucial for maintaining the ratings.

About the Entity
National Foods Limited (NFL) was incorporated as a private limited company in 1970 and converted to a public limited company in 1988; commercial operations formally commenced in 1996. NFL is listed on the Pakistan Stock Exchange, with its registered office in Karachi. The Company's manufacturing footprint spans three strategically located facilities at Port Qasim, Nooriabad, and M3 Motorway, Faisalabad. NFL is led by Mr. Zahid Majeed (Chairman) and Mr. Abrar Hasan (Global Chief Executive Officer), supported by an experienced management team.