VIS Reaffirms Entity Ratings of Faisal Spinning Mills Limited at 'A/A-1' with Stable Outlook.

Karachi -- VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Faisal Spinning Mills Limited (FSML) at 'A/A-1' (Single A/A-One) with a stable outlook. This rating signifies FSML's good credit quality and excellent liquidity factors, supported by its strong fundamentals.

FSML, with a 38-year legacy in yarn production primarily for the export market geared towards denim manufacturing, has diversified its offerings to include greige and dyed fabrics, as well as made-up articles. The company has demonstrated notable governance practices and recently integrated its finishing division, along with a slight increase in weaving capacity.

The reaffirmed ratings also take into account FSML's strong revenue growth, driven by the introduction of home textiles and dyed fabric sales, despite a decline in export volumes. However, the company faced challenges with profit margins, primarily due to declining yarn margins, higher cotton imports, and operating cost hikes. Despite these challenges, FSML's cash flows and debt coverage metrics remain in line with sector medians, and its leverage ratios remain competitive with peers.

Exports continue to be a significant part of FSML's revenue, accounting for over...