VIS Maintains ER Of OJEIL

KARACHI, (UrduPoint / Pakistan Point News - 9th Sep, 2021 ) :VIS Credit Rating Company Limited has maintained entity ratings of Omar Jibran Engineering Industries Limited at single A minus/A-two.

The outlook on the rating has been revised from 'Rating Watch-Negative' to stable. Long-term entity rating of 'A-' reflects good credit quality, adequate protection factors. Risk factors may vary with possible changes in the economy. Short-term rating of 'A-2' indicates good certainty of timely payment, liquidity factors and company fundamental factors are sound. Previous rating action was announced on August 06, 2021, said release on Thursday.

Revision in rating outlook captures OJEIL's overall performance during the period under review and healthy recovery posted in financial indicators from the pandemic led weakening.

Both topline and margins witnessed an improvement driven by volumetric growth, higher selling prices and lower inventory cost due to efficient procurement.

Cash flows and debt coverage metrics turned positive on account of improvement in profitability. Moreover, the company is in the process of streamlining their borrowing lines which will facilitate and create room for additional financing. Leverage indicators though have depicted an improvement in the outgoing year, however, continue to remain a rating constraint.

Ratings continue to gain support from the company's established position as a single source supplier of several critical auto parts to leading automobile and motorcycle manufacturers including Indus Motor Company (IMC), Honda Atlas cars Limited (HAC) and Atlas Honda Limited (AHL - manufacturers of Honda brand motorcycles).

Ratings also incorporate protective duty structure and existence of pass through mechanism related to raw material costs and significant exchange fluctuations.