PACRA Maintains Entity Ratings of Pakistan Services Limited

Pakistan Services Limited ("PSL" or "the Company"), operating under the Pearl Continental brand, continues to reflect the Company's sizable asset base and established presence in Pakistan's hospitality sector. PSL maintained its position as one of the country's prominent hotel operators with a portfolio comprising more than 1,200 rooms across major commercial and tourist destinations. The assigned ratings remain constrained by the Company's prolonged debt burden, liquidity challenges, and dependence on the successful execution of its debt restructuring strategy. Pakistan's hospitality industry has continued its gradual recovery amid improving domestic travel activity and government initiatives aimed at promoting tourism. Industry estimates project Pakistan's tourism market to grow at a double-digit pace over the medium term, supported by ongoing investment in tourism infrastructure and accommodation facilities. Nevertheless, elevated operating costs, energy tariffs, inflationary pressures, and relatively subdued international tourist inflows continue to affect profitability across the hotel sector. PSL's governance framework underwent notable changes during the review period following significant shifts in the Company's ownership structure. Subsequent to FY25, AKD Group Holdings (Private) Limited together with AKD Securities Limited acquired a ~27.95% stake in the Company, followed by the acquisition of ~28% voting shares by Mr. Dawood Jan Mohammad, subsequently a ~28% stake acquired by Thatta Cement Company Limited from Dawood Jan Mohammad. However, as per notice issued on the Pakistan Stock Exchange on November 03, 2026, Fauji Foundation acquired ~19.7% shares of the Company. These transactions constitute a material change in the ownership landscape, the long-term implications of which remain to be observed. However, as of the review period, the Company's Board composition remained unchanged, while the management structure was also broadly intact, except for the appointment of Mr. Adnan Ahmed Saeed as Acting CFO of PSL. The Company's operations remained stable, with its revenue-generating capacity and profitability profile remaining intact. The Company continued to maintain its gross profit and net profit margins, reflecting the resilience of its core operations and its ability to sustain earnings despite prevailing business conditions. PSL's financial risk profile remains stressed due to its significant debt servicing obligations. Since undertaking its deleveraging program, the Company has repaid principal of PKR ~8.5bln and interest of PKR ~10.4bln against total long-term facilities of PKR ~15.3bln. Outstanding principal obligations currently stand at PKR ~6.8bln, including a Sukuk facility of PKR ~4.5bln. The Company's substantial non-current asset base, valued at PKR ~55.5bln as of 9MFY25, continues to provide support against its debt obligations. However, unresolved restructuring negotiations and pending asset divestments warrant close monitoring and constitute the basis for the rating watch. Going forward, the Company's credit profile remains dependent on the timely execution of its debt restructuring plan and successful monetization of identified assets. The recovery trajectory of the hospitality sector, improvement in occupancy levels, maintenance of profitability, and sufficient liquidity generation for meeting debt obligations will remain important considerations. Furthermore, resolution of the material uncertainty related to the Company's going concern status, as highlighted by external auditors, is considered critical for future rating stability.
The ratings remain dependent upon the successful restructuring of the Company's outstanding debt obligations, including the Sukuk facility, and the generation of sufficient cash flows to support timely repayments. Improvement in liquidity, sustained profitability, and completion of the planned asset disposal program would provide support to the ratings. Additionally, progress in resolving the uncertainties surrounding the Company's going concern status and adherence to the restructuring milestones remain prerequisites for a favorable rating assessment.

About the Entity
Pakistan Services Limited was established in 1958 and is quoted on the Pakistan Stock Exchange. It owns and operates Pearl Continental Hotels – the largest hotel chain in the country with 1,200+ rooms. Mr. Bastien Paul Emile Blanc is the CEO of the Company.