PACRA Maintains the Entity Ratings of Sapphire Fibres Limited.

The assigned ratings of Sapphire Fibres Limited (“SFL” or “the Company”) reflect the established profile of its sponsoring group, the Sapphire Group, a distinguished conglomerate in Pakistan. The group has considerable business diversity in multiple industry segments, including textile, power generation, dairy and retail. SFL is considered one of the group's leading ventures in the competitive textile landscape. The Company operates as a vertically integrated unit, utilizing advanced production technologies to deliver high-quality products across its spinning, denim fabrics, knitted fabrics and garments divisions. Over time, SFL has expanded its income streams beyond the textile business to manage concentration risk, entering the power sector through core strategic investments and scaling its equity investment book. As part of its business diversification strategy to enhance its presence in the power sector, SFL acquired a 50% share in UCH Power (Private) Limited and UCH–II Power (Private) Limited.
During FY25, the Company experienced a modest incline in revenue growth, reaching PKR 50.5bln (FY24: PKR 47.4bln, 1QFY26: PKR 11.6bln,), driven by business volumes. The Company’s revenue composition exhibits a notable shift from a predominantly export-oriented sales base to a more balanced mix. Local sales clocked in at PKR 29.8bln, surpassing export sales of PKR 25.1bln. This strategic shift reflects the Company’s strategic focus on strengthening its domestic market presence while maintaining a robust export footprint. Spinning remains the top-performing segment in revenue generation, contributing PKR 27.2bln in the Company’s top line, followed by PKR 13.9bln from denim and PKR 9.3bln from knits. The knitting segment recorded a notable recovery during the year, supported by improved demand dynamics in key export markets and enhanced operational performance. SFL’s clientele consists of established entities across various export destinations worldwide, primarily in Asia and European markets.
The Company’s gross margins continued to face strain during the year, primarily due to sustained procurement of imported raw cotton and elevated input costs. Rising energy and labor expenses, partially offset by monetary easing, persisted as key industry-wide challenges across the textile value chain. Despite margin pressures at the operational level, the overall earnings profile strengthened, reflecting enhanced financial outcomes for the period. The Company reported a substantial improvement in profitability during the year (FY25: PKR 13.7bln, FY24: PKR 3.4bln), primarily driven by related party dividends. The funding matrix of the Company revolves around short-term equity investments, which supplement the liquidity profile and augment the profitability matrix of the Company through the inflow of dividend income. The Company maintains a low-leverage capital structure with a well-managed working capital, supplementing the financial risk profile. Cash flows and coverage metrics are considered adequate, with scope for further improvement.
The ratings depend on a consistent improvement in profitability while venturing into diversified business segments. Ensuring the prudent administration of the investment book continues to hold importance. The sustainability of coverages and stable generation of cash flows from core consolidated operations remain critical for assigned ratings.

About the Entity
Sapphire Fibres Limited - listed on the Pakistan Stock Exchange - commenced operations in 1979. The Company’s capacity is maintained at ~104,256 spindles and ~164 looms, respectively. It is the flagship company of the Sapphire group. The Overall control vests with a nine-member Board, dominated by the sponsoring family, while three members are independent directors. The Board is chaired by Mr. Yousuf Abdullah. The CEO, Mr. Shahid Abdullah oversees the Company’s operations. He is supported by a team of highly qualified and experienced professionals.