KARACHI:VIS Credit Rating Company Limited has downgraded the entity ratings of International Textile Limited from single A/single A-two to single A minus/single A-two.
The outlook on the assigned ratings have been revised from ‘Rating Watch- Developing’ to the stable. The medium to long-term rating of ‘A-’ denotes good credit quality with adequate protection factors. Risk factors may vary with possible changes in the economy, said release on Wednesday.
The short term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Risk factors are small. Previous rating action was announced on May 11, 2020.
Incorporated in 1985, ITL is a vertically integrated company engaged in spinning, sizing, processing of yarn, manufacturing of fabric, terry and their made ups. Downward revision in ratings is reflective of the company’s relatively high business risk vis-à-vis other textile players emanating from the demand sensitive segment of the textile made-ups targeted towards hotels, restaurants, food chains and hospitals. These businesses are impacted by the ongoing COVID-19 situation where new waves are emerging every few months.
The company is primarily an export oriented company as the same constitute more than 95% of overall sales. Financial assessment for fiscal year 2020-21 reflects lower revenue due to the market slowdown specifically in the hotels and restaurants sector due to COVID-19.