VIS Reaffirms Entity Ratings Of Sitara Chemical Industries Limited
Sumaira FH Published October 27, 2020 | 10:02 PM
VIS Credit Rating Company Limited has reaffirmed the entity ratings of Sitara Chemical Industries Limited at single A plus/A-one
KARACHI, (UrduPoint / Pakistan Point News - 27th Oct, 2020 ) :VIS Credit Rating Company Limited has reaffirmed the entity ratings of Sitara Chemical Industries Limited at single A plus/A-one.
The medium to long-term rating of 'A+' signifies good credit quality with strong protection factors. Moreover, risk factors may vary with possible changes in economy, said press release on Tuesday.
The short-term rating of 'A-1' denotes high certainty of timely payments coupled with excellent liquidity and supported by good fundamental protection factors. Outlook on the assigned ratings is 'stable'. The previous rating action was announced on Nov.8, 2019.
The ratings assigned to SCIL take into account its leading position in the Chlor-alkali sector with the highest market share of around 45% along with strong sponsor support.
The ratings incorporate moderate business risk profile having sizable revenues in a highly competitive operating environment.
However, the revenues, margins and profitability position of the company took a dip owing to depressed economic activity amid ongoing pandemic.
The ratings draw comfort from manageable financial risk appetite emanating from its low leveraged capital structure, sound liquidity profile and adequate debt service coverage. Meanwhile, the management's focus on improving operational efficiencies through BMR and planned diversification in revenue stream is expected to bode well for the company.
Rising electricity and RLNG tariff, rupee devaluation and risk of resurgence of COVID-19 till the vaccine is developed remain key challenges. Therefore, the ratings incorporate significant dependence of caustic soda manufacturers on textile sector and highly competitive market dynamics.
The company's ability to maintain scale of operations, improve profit margins and contain leverage indicators around current levels would be the key ratings sensitivities.
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