PACRA Updates the Entity Ratings of Mahmood Textile Mills Limited

The ratings upgrade of Mahmood Textile Mills Limited (“MTML” or “the Company”) derives its rationale from the Company’s strong fundamentals and appreciable growth in the value-added segment, reflecting positively on its business risk profile. While other industry players faced challenges, the Company sustained its growth trajectory and maintained adequate margins. This is supported by its longstanding presence across the textile value chain and its gradual transition into a fully vertically integrated operation. Lately, management has segregated the apparel business into a separate entity, driven by significant volume expansion in ready-made garments and the expectation of continued growth in the coming quarters.

The Company operates a state-of-the-art apparel facility, equipped with advanced production systems and automation processes to enhance operational efficiency. The Company also maintains a well-established in-house Research and Development function within its apparel division, focused on innovation, the introduction of new concepts, analysis of target market trends, and evaluation of customer preferences to strengthen product positioning and brand appeal.

During 1HFY26, the Company achieved a topline of PKR 24.2bln (1HFY25: PKR 27.7bln) on a standalone basis. The Company has strategically shifted toward a profit-oriented approach rather than emphasizing volume expansion alone. In terms of segment-wise revenue contribution, spinning continues to be the largest contributor, followed by weaving. The cost structure remained well-managed, supported by strategic initiatives such as investments in renewable energy and rationalization of the product mix. Profitability was supplemented by non-core income generated from capital market investments. Finance costs, however, remained elevated to meet peak seasonal requirements. Consequently, the Company’s bottom line improved, with profit after tax (PAT) increasing to PKR 425mln (1HFY25: PKR 341mln).

From a financial risk perspective, the Company maintains an adequate profile. Liquidity indicators remained strong; however, elevated leverage continues to exert pressure on the balance sheet. The inventory buildup reflects a peak seasonal, industry-wide trend expected to ease in the forthcoming quarters. Management has prudently identified the key parameters affecting the capital structure and has developed a well-articulated plan to deleverage the balance sheet and make it more stronger in terms of risk profile. The Company has defined key parameters through which they intend to monitor the progress of the deleverage initiative. They have expressed an intention to achieve and are already on the path to achieving these targets. The envisaged strategy has also devised the means and mechanics to achieve them.
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The ratings are contingent upon the Company’s ability to sustain core profitability while expanding the business volumes. Any deterioration in the financial risk profile will have a negative impact on the assigned ratings.

About the Entity
MTML, incorporated in 1970, is a family-owned business primarily engaged in the production and sale of yarn, grey cloth, and garments. It is listed on the Pakistan Stock Exchange. The majority of the Company’s shareholding is held by the general public (~80.3%). Directors, the Chief Executive, and their spouse and minor children collectively hold ~18.48%, while the remaining stake is held by joint stock companies and others. The Board is chaired by Mr. Khawaja Muhammad Ilyas. The CEO, Mr. Khawaja M. Anees is supported by a team of highly qualified and seasoned professionals.