PACRA Maintains Entity Ratings of Bestway Cement Limited

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PACRA Maintains Entity Ratings of Bestway Cement Limited

November 19, 2018

Lahore, November 19, 2018 (PPI-OT): Bestway Cement’s ratings reflect its leading position in the market emanating from its highest market share (19.7%). The Company’s recent brown field expansion and successful mergers in the past helped company to maintain its position. The company has cost efficient operational framework, healthy margins, and robust profitability. Despite the sharp decline witnessed in margins, industry wide, on account of 1) international coal prices and relevant duties, 2) increase in FED and 3) dip in cement prices – Bestway managed to depict good margins.

The company’s recent expansion of 1.9 mln tpa was commenced in Jun-18 and will be fully operational in FY19 which helped in maintaining its market share regardless of the expansions by many other players. The company’s ratings are further strengthened by the sustainable dividend income from its strategic investment in United Bank Limited (UBL) in which company is holding 7.68%. The company’s financial risk is categorized by efficient working capital management in terms of both cashflows and short term borrowing, low leveraged structure, strong coverages, remains low. The ratings also draw comfort from the strong sponsor support (Bestway Group).

The ratings are dependent on upholding of company’s leading market position along with sustenance of business volumes and margins. Company’s long term debt repayment is important to improve financial risk matrix. The company’s strong business performance in current stretched economic scenario – challenges on demand front – remains vital for ratings.

For more information, contact:
Analyst
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
Email: hammad.rashid@pacra.com
Web: www.pacra.com

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