PACRA Maintains the Entity Rating of Nagina Cotton Mills Limited

Nagina Cotton Mills Limited ("NCML" or "the Company") is part of one of Pakistan's oldest and well-established medium-sized textile clusters - the Nagina Group. The Group's spinning operations are carried out through NCML and Ellcot Spinning Mills Limited, while Prosperity Weaving Mills Limited undertakes weaving operations. The Company continues to derive rating comfort from the Group's diversified, vertically integrated textile profile. NCML is considered the Group's flagship spinning entity, historically catering mainly to the export segment, and manufactures carded and combed cotton, core-spun, and blended yarn through a spinning unit of 62,508 spindles, operating at optimum utilization. Intra-group linkages remain a key operational strength, with coarser, export-specification yarn also being directed toward the Group's weaving entity, lending greater revenue confidence. Energy needs are met through a diversified mix of gas, grid, furnace oil, and solar; solar capacity has been enhanced to approximately 6.5MW, now meeting around 16% of the unit's daily energy requirements. The Group's continued competitiveness continues to be underpinned by a sustained Balancing, Modernization and Replacement (BMR) program across all its units. The spinning and weaving segment of the textile industry remained largely a price-taker during FY26, with limited control over raw material and energy costs. Domestic cotton output continues to meet only a modest share of the market's overall requirement, keeping reliance on imported cotton elevated. The local cotton prices stayed broadly range-bound during the year. Export demand improved in recent quarters, though visibility remains limited amid continued softness in international, particularly European, demand. Against this backdrop, NCML's topline for 9MFY26 stood at PKR 15,444mln, with the sales mix continuing to reflect a meaningful local orientation even as export demand showed some recovery during the latest quarter. Gross margin remained broadly steady at 7.9% (FY25: 8.1%), while net margin improved to 0.5% (FY25: 0.3%). The bottom line has already surpassed the full FY25 outturn, supported by a more stable financial risk profile, as reflected in improved debt servicing capacity and lower reliance on borrowings, particularly short-term debt. Working capital remained broadly stable, although liquidity moderated during the period. Governance comprises a 10-member Board with adequate representation across non-executive, independent, and executive categories, supported by active committee oversight. Continued sponsoring-family presence in both ownership and executive roles provides continuity to the Company’s strategic direction, while a stable management team, led by a CEO with extensive experience in the textile business, has maintained consistent execution and oversight, supporting operational and financial discipline.
The ratings remain underpinned by NCML's improving coverage and leverage profile, set against a structurally constrained, margin-restricted environment and continued export demand uncertainty. Sustaining margins through operational efficiencies, maintaining a balanced sales mix, and preserving comfortable coverage and leverage metrics will remain key rating considerations going forward.

About the Entity
Nagina Cotton Mills Limited ("NCML" or "the Company"), incorporated in 1967 as a public limited company, is part of the Nagina Group, which holds approximately 91% of the Company's shareholding through group companies and sponsoring individuals. The management team is headed by CEO Mr. Amin Ellahi Shaikh, who is well-versed in the textile business, supported by a seasoned finance and operations team, providing the requisite expertise to steer the Company's operations.