PACRA Maintains Entity Ratings of Entertainment Pakistan Limited

Entertainment Pakistan Limited ("EPL" or "the Company") enjoys two streams of income: rental and through the sale of developed properties. The company earns sublease income by subletting buildings that have been taken on Lease from DHA under the first pivot, and develops its own real estate projects under the second pivot. EPL’s maiden residential project, "Dawood Homes," has been fully completed and sold out. Its second project, "Roshan Homes," has experienced significant delays, with construction stalled at approximately 8% completion as of March 2025, owing to the non-receipt of the second tranche of investment from REALL Limited UK, a matter entangled in legal formalities and further complicated by the prevailing international environment. Separately, the Company is advancing "Urban City Apartments" (47 triple-storey houses, 5 Marla each, at Urban City Muridke), where model units have been constructed. Two additional pipeline projects, "Rio Villas" and "Rio Homes", remain under discussion. During FY25, EPL reported revenue of PKR 77mln, representing a decline of 62% from PKR 203mln in the previous year. The revenue primarily reflects sublease income, as the Dawood Homes development project has reached maturity, and no new housing units or projects were sold during FY25. Despite this contraction, gross profit margin improved to 44.0% (Jun-24: 36.5%). Net profit declined to PKR 11mln (Jun-24: PKR 37mln), with net margin compressing to 14.2% (Jun-24: 18.0%), largely due to the fixed nature of administrative expenses. The equity base strengthened modestly to PKR 129mln (Jun-24: PKR 118mln), while leverage improved to 21.0% (Jun-24: 28.8%) as total borrowings remained broadly stable. The liability structure is primarily comprised of lease obligations and director-supported funding, with no significant reliance on commercial borrowing. During FY26, the Company acquired an additional plaza under the same lease-and-sublease model, which is expected to contribute to revenues within the current financial year, thereby partially offsetting the decline in development-related income. In addition, the Urban Homes project is in advanced stages of launch and, together with the newly acquired asset, is expected to enhance income visibility and support recurring cash flows from FY26 onwards. The assigned rating reflects EPL’s niche presence in affordable housing, successful completion of Dawood Homes, low leverage, and adequate interest coverage. The Company operates without conventional bank financing, relying instead on director funding and internal resources, which supports financial discipline and removes formal debt servicing requirements. However, governance constraints persist, with the planned registration as a Real Estate Management Company (RMC) with SECP still pending, limiting access to broader capital markets.
The rating remains sensitive to EPL’s ability to secure funding for Roshan Homes, launch new projects, improve cash conversion from inventory and receivables, and further strengthen its governance framework.

About the Entity
Entertainment Pakistan Limited (incorporated in 2011; converted to a public unlisted company in 2019) is headquartered in Lahore. Shareholding is evenly distributed among three sponsors, with shares held in the names of their respective spouses. The Board comprises six members, including two independent directors. The Company’s principal activities encompass the leasing and subleasing of commercial properties, as well as residential real estate development.