Analyst
Sohail Ahmed Qureshi
sohail.ahmed@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
Related Research
PACRA Maintains Entity Ratings of Ibrahim Fibres Limited
Rating Type | Entity | |
Current (08-Feb-22 ) |
Previous (08-Feb-21 ) |
|
Action | Maintain | Maintain |
Long Term | AA | AA |
Short Term | A1+ | A1+ |
Outlook | Stable | Stable |
Rating Watch | - | - |
Ibrahim Fibres Limited (hereafter referred as “IFL” or “the Company”) is primarily engaged in the manufacturing & selling of Polyester Staple Fibre (PSF) and Yarn. The ratings reflect IFL’s long standing and sustained fundamentals underpinned by its solid market position as a leading player in the local PSF industry. Globally, the Asia-Pacific region is viewed as principal market for polyester demand on account of expansion in textile sector. Pakistan’s Polyester Fibres industry has shown growth over the period owing to build up consumption of polyester throughout the textile chain like spinning, weaving, dyeing, composite, etc. Accordingly, IFL is market leader and captures ~65% market share followed ICI Pakistan Limited ~30% and Rupali Polyester Limited ~5%. Post ease in Global Pandemic Crises, subsequent recovery in demand and increase in prices have benefitted the industry. Thereupon, the Company observed an upward revision in topline due to better capacity utilization of Polyester Plant and expansion in Textile division. In 2021, revenues of the Company witnessed a double-digit growth due to uptick in both sales volume and average selling prices. Going forward, IFL’s revenues are expected to escalate on back adequate orders in pipeline and further expansions in both PSF and Yarn divisions. The expansion shall be undertaken with predominantly internally generated cash flows. Further, imposition of anti-dumping duty on PSF imported from China since Oct-15 has supported volumetric growth and margins. Profitability profile of the Company in 2021 significantly improved leading to higher gross & operating margins depicting efficient production and positive performance. During period under review, IFL has retired most of its long-term debt. Thus, making the capital structure low leveraged, mainly comprising of short-term borrowings for working capital requirements. IFL’s financial risk profile remains strong, accentuated by robust cashfows and healthy coverages. The ratings further incorporate the Company's association with the Ibrahim Group, which has demonstrated strong support.
The ratings are dependent on the Company’s ability to sustain its relative position, margins and profitability. Optimal utilization of capacity enhancement in spinning and resulting improvement in margins will remain important.
About
the Entity
Ibrahim Fibres Limited, incorporated in 1986 and listed on Pakistan Stock Exchange, is engaged in the production & marketing of PSF and yarn. Its production facilities are located at Shahkot near Faisalabad; currently these facilities include annual production capacity of 390,600 tons for PSF and 240,192 spindles for Yarn. Ibrahim Group holds majority stake (~90%) in Ibrahim Fibres through Group holding company, Ibrahim Holdings (Private) Limited.
The Company’s Board of Directors comprises seven members, including the Chairman, Mr. Sheikh Mukhtar Ahmed and CEO, Mr. Mohammad Naeem Mukhtar. Remaining members comprise three Ibrahim Group affiliates and two independent members. All Board members have significant industry related experience.