PACRA Maintains the Entity Ratings of Sapphire Retail Limited

The rating of Sapphire Retail Limited (SRL) reflects its strong brand positioning as one of Pakistan’s prominent lifestyle retail players. SRL has consistently delivered profitability and demonstrated sustained growth in business volumes over the years, with reinvested earnings strategically strengthening its overall business risk profile. The Company’s long-term vision centers on building a resilient retail brand supported by stable profit generation and sustainable expansion. The rating takes comfort from the sound and well-established profile of its sponsoring entity, the Sapphire Group—one of Pakistan’s largest textile manufacturers and exporters. SRL functions as the Group’s dedicated retail arm and operates as a wholly owned subsidiary of Sapphire Textile Mills Limited. Looking ahead, the evolving digital environment underscores the critical role of customer experience in capturing emerging market opportunities. In this context, the Company remains committed to investing in two key areas: (i) technological advancement within its e-commerce operations and (ii) comprehensive training and upskilling of staff across its retail network. SRL owns a wholly owned subsidiary, Designtex (SMC-Private) Limited (DSPL), engaged in the manufacturing, stitching, and trading of textile products and allied items. DSPL acts as SRL’s principal vendor and significantly enhances its supply chain efficiency by extending trade credit for the procurement of finished goods. The Company offers an extensive portfolio of clothing and auxiliary brands catering to diverse segments of the market, including unstitched fabrics, ready-to-wear apparel, fragrances, and accessories. Its product range spans multiple income brackets and age groups, contributing to its long-term business sustainability. SRL currently operates 50 domestic retail outlets along with three international stores.
During FY25, the Company’s topline recorded an organic increase of approximately 26.3% YoY (FY25: PKR 41.38bln; FY24: PKR 32.74bln). Despite the Company’s ability to transfer a portion of cost pressures to customers, gross margins witnessed a decline due to elevated raw material costs. The rise in marketing and administrative expenses aligns with prevailing inflationary conditions and reflects the Company’s strategy to enhance market penetration. SRL’s financial risk profile remains robust, supported by strong credit quality indicators. The domestic retail landscape is largely fragmented and dominated by the unorganized sector, presenting sizeable growth prospects for organized retailers to expand their market share through deeper penetration and improved customer engagement.
The ratings are dependent on maintaining a profitability matrix at an optimal level while expanding business volumes. The continuity of cash flow generations from core operations remains critical. The built-up of the investment portfolio will further amplify the liquidity profile of the Company. Innovation in the RTW segment will play a pivotal role in improving margins.

About the Entity
SRL is an unlisted, public limited company, incorporated in June 2014. The Company has a five-member sponsoring family board, comprised of one executive and four non-executive directors. The board is chaired by Mr. Nadeem Abdullah, while the CEO, Mr. Nabeel Abdullah, oversees the Company’s affairs.