PACRA Assigns Preliminary Ratings to Ismail Industries Limited - PPSTS-7 - PKR 8bln

The assigned ratings of Ismail Industries Limited (“IIL” or “the Company”) reflect its entrenched market position, resilient operational dynamics, and demonstrated capacity to diversify and innovate within its core business segments. During 9MFY26, ~86% of total revenue emanated from domestic operations, while exports accounted for the remaining ~14%. (FY25: ~66%, ~34%, respectively). The Company operates through two primary divisions: Food and Plastics, contributing ~85% and ~15% to topline, respectively. Amid persistent challenges in the export market, the Company strategically realigned its commercial focus toward the domestic market, driving robust local sales and sustaining operational momentum. The ratings incorporate IIL’s sustained business growth, underpinned by prudent financial management and sound liquidity buffers. The Company’s expanding footprint is primarily driven by higher volumetric sales in the domestic market and the successful rollout of new product lines. During the year, IIL infused 100% equity amounting to USD 10 million into a newly incorporated foreign subsidiary, Bisconni Middle East Manufacturing LLC, based in Abu Dhabi, UAE. This strategic investment aims to capture the rising demand within the middle east region’s biscuit segment. IIL’s diversified brand portfolio comprising Candyland, Bisconni, SnackCity, Ismail Nutrition, Ghiza Flour, and Astro Films continue to anchor revenue stability. The assigned ratings further draw comfort from IIL’s strong organizational structure, effective oversight mechanisms, and sound governance practices, collectively strengthening its credit profile. The Company maintains notable strategic investments in subsidiaries and associates, reflecting its commitment to diversification and vertical integration. These include a ~78.53% stake in Hudson Pharma (Pvt.) Limited, engaged in the production of inhalation solutions, ophthalmic drops, intravenous infusions, and topical formulations, and a ~75% holding in Ismail Resin (Pvt.) Limited, enabling vertical integration through PET resin manufacturing. Financially during 9MFY26, IIL reported a marginal contraction in gross margins to ~19.5% (9MFY25: ~21.0%). This pressure also translated to the bottom line. Recognizing the inherent challenges in the confectionery sector, such as evolving consumer preferences and a heightened focus on health-conscious consumption, the Company continues to emphasize product innovation, including the launch of premium variants aimed at strengthening margin sustainability.
The ratings are sensitive to the Company’s ability to sustain revenue expansion, protect operating margins, and maintain prudent leverage, supported by ongoing initiatives to optimize working capital and strengthen brand equity.

About the Entity
Ismail Industries Limited, incorporated in 1988, is a public listed Company. Principal activities of the Company are manufacturing and trading of sugar confectionery items, biscuits, nutritional products, flour, cast polypropylene films under the brands of 'CandyLand', 'Bisconni', 'SnackCity', 'Ismail Nutrition', Ghiza', 'Super Cereal' and 'Astro Films' respectively.

About the Instrument
The Company intends to issue a rated, privately placed, unsecured Short-Term Sukuk (PPSTS-7) amounting to PKR 8.0 billion, including a green shoe option of PKR 3.0 billion, in August 2026. The proceeds from the issuance will be utilized to finance the Company's working capital requirements. The Sukuk will have a tenor of six months, maturing in February 2027. It will carry a profit rate of 3MK plus an agreed spread, with both the principal and profit payable in a single bullet payment at maturity.