PACRA Maintains Entity Ratings of Cherat Cement Company Limited

Lahore, December 29, 2017 (PPI-OT):The ratings reflect Cherat Cement’s healthy business profile which is further fortified by favourable local demand exhibiting strong fundamentals. The commencement of new line (1.3mln tpa) and WHRPP are the positives. The company’s revenues witnessed strong standalone growth solely due to commencement of new line. With the announcement of another line (2.4mln tpa), the company is likely to join the league of mid-tier industry players in coming years.

The company’s business profile is likely to behave strongly, in the medium term, on the back of steady demand growth in the company’s existing markets. With high capacity utilization level (FY17: 97%, FY16: 90%), the company can capitalize on the current strong demand coming. The financial risk profile is adequate on the back of internal generation. However, the debt-driven expansion may increase leveraging in upcoming years. The ratings take comfort from strong coverages.

The ratings are dependent on upholding of the company’s business vis-a-vis financial risk profile. Any significant deterioration in the sector’s outlook particularly any unfavourable change in demand and expansion matrix, thereby exerting pressure on prices and margins, may negatively impact the ratings.

For more information, contact:
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore – Pakistan
Tel: +9242 586 9504 -6
Fax: +9242 583 0425

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