PACRA Maintains the Entity Ratings of Stylers International Limited

The ratings of Stylers International Limited (“SIL” or “the Company”) reflect its positioning in the competitive textile landscape. This emerges from the Company’s affiliation with the US Group, operating across four business verticals: Apparel, Fabric, New Ventures and Logistics. Over the years, the sponsoring group has established a formidable market presence in the value-added segment, supported by contemporary production capabilities and a diverse product range. The Company’s product portfolio comprises denim jeans, twill jeans, denim shorts, trousers, chinos and various kids' wear products. Operating with two production facilities, the Company’s overall production capacity stands at approximately 8.95mln pieces per annum.

To clinch the rising demand for value-added products, SIL underwent strategic expansion and initiated the “Sunshine Project”. The infrastructure of this project is in the works, with operational efficiencies expected to be fully utilized by the end of FY26. This facility has been meticulously designed to produce approximately 6.0mln pieces per annum. The Company’s topline is predominantly export-driven, with a contribution of PKR 20.3bln as of FY25 (FY24: PKR 14.0bln). Domestic sales made a marginal contribution of PKR 291.5mln (FY24: PKR 297.0mln) to the total revenue. The Company’s prime export destination is Europe. The growth in export revenue is primarily driven by consistent volumetric expansion and a well-managed cost structure, despite a challenging global environment and intense competition from regional players. In terms of revenue contribution, denim jeans remained the Company’s top-selling product. In FY25, the margins witnessed a slight compression attributed to several cost pressures. Key contributing factors include expensive raw material procurement and upward revisions in the minimum wage rate policy. Additionally, the transition from the final tax regime to the normal tax regime for export-oriented units led to an increase in the taxation burden. Despite these challenges, SIL demonstrated resilience and secured a net profitability of PKR 1.2bln (FY24: PKR 1.4bln).

The working capital requirements of the Company are primarily financed through internally generated cash flows and sponsor support. The Company's financial risk profile is considered strong with an aptly managed working capital cycle. The Company has a minutely leveraged capital structure with stable coverages and cash flows. For long-term sustainability, the Company has invested in a cost-efficient 2.0 MW solar project and implemented an ESG framework to ensure environmental stewardship. Additionally, the steam generation from fossil fuels has been converted to biomass across both manufacturing facilities.
The ratings are dependent upon the intact business operations and draw comfort from the sponsor’s profile. Sustained margins, coverages and cash flows at an optimal level while expanding business volumes remains essential.

About the Entity
Stylers International Limited, established in 1991, was listed on PSX on January 22, 2024. The sponsors hold a significant stake (99.45%), with Individuals accounting for 69.68%, associated companies for 29.77% and the remaining shares rest with the general public (0.41%) and others (0.14%). The composition of the board (four non-executive members; one executive and two independent directors) is indicative of a strong governance framework.