PACRA Maintains the Entity Ratings of Sefam (Pvt.) Limited

Sefam (Pvt.) Limited ("SPL" or "the Company") is a retail-focused entity operating two prominent brands: Kayseria (KY) and Leisure Club (LC). KY is the flagship in-house brand, focusing on unstitched and ready-to-wear women's clothing. LC offers western-style casual and semi-formal wear, primarily targeting kids, youth and young adults. The Company has also introduced Shahnameh, which specializes in eastern wear for men and currently operates as part of LC. A cost optimization strategy remains in effect, with the closure of underperforming retail outlets reflecting its measured execution. The management overhaul, including the CEO dedicated to the retail segment along with other vertical heads with extensive retail industry experience, continues to shape the Company's operational direction and long-term strategic priorities. The group companies remain SPL's prime suppliers, augmenting its supply chain matrix. During 1HFY26, the Company recorded net sales of ~PKR 3,446mln, up ~12.0% YoY compared to ~PKR 2,737mln in 1HFY25. Kayseria continues to contribute ~75.0% of revenues, with LC forming the remainder. E-commerce contributed ~20.0% of total sales, consistent with the prior period, while ~40.0% of retail outlets continue to operate under a franchised model. The Company maintained a healthy gross margin of ~47.0% in 1HFY26, reflecting improved cost absorption and a better product mix. However, the Company continues to face pressure from elevated operating costs. Operating profit turned positive in 1HFY26, against an operating loss during FY25, indicating a meaningful improvement in operating performance. Net profit improved during 1HFY26, compared to full year FY25. The management remains committed to enhancing the feedback mechanism for franchised outlets as the digital landscape evolves, recognizing that customer experience is crucial for capitalizing on emerging opportunities. The management is gradually rationalizing operating expenses, as reflected in the sequential improvement in profitability across periods. The financial risk profile of the Company is considered adequate with a stretched working capital cycle. The working capital requirements are primarily met through long-term loans from sponsors, while the remaining requirements are fulfilled through conventional borrowings. The Company currently maintains a negative equity position of ~PKR (66) mln as of Dec'25, compared to ~PKR (91) mln as of Dec'24, demonstrating gradual recovery through profit generation across successive periods. The improvement in the equity position reflects the progressive nature of the financial recovery, though sustained profitability will be essential to restore a positive equity base over the near term.
The ratings are dependent upon the management's ability to improve profitability, generate sufficient cash flows, and maintain coverages at an optimal level. The near-term trajectory of profitability will be closely watched, particularly the sustainability of margin recovery and the pace at which the equity position is restored. Any meaningful deterioration in operating performance, working capital management, or debt servicing ability could exert negative pressure on the ratings.

About the Entity
Sefam (Pvt.) Limited ("SPL" or "the Company"), incorporated in 1989, offers a comprehensive range of Western and Eastern wear for men, women, and children. The Company's leadership is anchored by Mr. Hamid Zaman and Mr. Tariq Zaman, who serve as directors. Mr. Hamid Zaman holds the majority shareholding with a 53.18% stake, while Mr. Tariq Zaman and Ms. Ambreen Zaman each hold an 8.41% share. Mr. Yameen Malik is the CEO of Sefam, who brings more than thirty years of retail industry experience.