PACRA Maintains Entity Ratings of Din Textile Mills Limited

Din Textile Mills Limited ("Din Textile" or "DTML" or "the Company") maintains an established presence in Pakistan's textile industry, with operations spanning spinning, weaving, and stitching, supported by modern manufacturing facilities and a diversified product portfolio comprising value-added yarns, greige fabric, and specialized cotton products. The Company forms part of the Din Group, a diversified business group with established interests across textiles, leather, energy, agriculture, and real estate, providing DTML with group-level operational expertise and a diversified business ecosystem. Spinning remains the primary revenue contributor, followed by weaving, while dyeing primarily supports internal yarn requirements. The Pakistan Composites and Garments sector recorded mixed performance during 9MFY26. Domestic cotton production remained below government targets, sustaining reliance on imports, while relatively softer cotton prices provided some relief to raw material costs, with raw material's share of cost of sales easing to 66.8% (9MFY25: 70.0%). Sector gross margins remained broadly stable at 13.8% (9MFY25: 13.2%), as lower cotton prices were largely offset by elevated industrial energy tariffs and other input costs, which rose to 12.5% of cost of sales (9MFY25: 9.8%). Sector leverage moderated to 36.2% (9MFY25: 42.3%), while interest coverage improved to 2.2x (9MFY25: 1.7x) amid an easing interest rate environment. Against this backdrop and despite DTML's topline decline, operating performance of the Company improved, with gross and operating margins rising to 11.0% (FY25: 9.3%) and 7.4% (FY25: 6.5%), respectively. The improvement reflects a favorable product mix, better production efficiency, prudent business selection, and continued cost optimization. Consequently, the Company's net loss narrowed significantly to PKR 61mln (FY25: PKR 706mln). The assigned ratings are supported by DTML's continued commitment to strengthening its product mix, enhancing capacity utilization, and optimizing its cost structure. The Company benefits from an extensive energy mix comprising captive power from the Din Power Plant supplemented by solar generation, with operational solar capacity reaching 12.6MW. Following the completion of planned solar generation expansion, it is estimated to meet more than 20% of Unit 3's power requirement as per management’s representation. Additionally, lower-cost gas supply arrangements at Unit 1 are also expected to reduce fuel and power costs by 10-15%. The recent closure of Unit IV reflects management's efforts to rationalize capacity and improve operational synergies, while the unutilized facility has been rented to enhance asset utilization. The working capital requirements remained elevated, with net working capital days increasing to 122 (FY25: 114), primarily driven by higher receivable and inventory days. The prolonged working capital cycle continues to necessitate greater reliance on short-term borrowings, partially offsetting the Company's deleveraging efforts aimed at unwinding the debt buildup witnessed during FY25. Additional short-term financing is also being evaluated to meet seasonal working capital requirements, particularly cotton procurement. Management remains focused on profitability enhancement, balance sheet strengthening, and financial discipline, with greater emphasis on value-added and export-oriented products.
While the ratings draw comfort from DTML's improving profitability, moderating leverage, and strengthened coverage metrics, the assigned ratings remain contingent on the Company’s sustaining margin improvements, continuing deleveraging, and translating periodic profitability into consistent full-year earnings commensurate with the assigned rating band.

About the Entity
Din Textile Mills Limited ("Din Textile" or "DTML" or "the Company") is a public limited company, incorporated in 1988, engaged in the manufacturing and sale of yarn and greige fabric, spanning spinning, weaving, and dyeing operations. The Company is governed by a nine-member board chaired by Mr. Shaikh Muhammad Jawed, with day-to-day operations managed by CEO Mr. Shaikh Muhammad Tanveer, supported by an experienced management team.