Anam Waqas Ghayour
PACRA Maintains the Entity Ratings of Sitara Heights (Pvt.) Limited
Sitara Heights (Pvt.) Limited is committed towards the development of its real estate ventures including residential and commercial properties. Currently the Company is engaged in five projects, three in Lahore and two are in Faisalabad. Namely; 3 Jays Tower, Sitara Icon Tower, Sitara Serene Tower, The Edge and Gold Vista. Company has successfully launched four projects and eyeing to launch Gold Vista soon. 3 Jays tower project has been substantially sold and selling of Sitara Icon Tower, The Edge along with Sitara Serene Tower has also commenced. Major risk is mitigated through acquisition of land for all the projects which indicates the strong financial position of sponsors. Additionally, the Company has shown progress towards the construction of projects and management is confident to meet the completion benchmarks. The current inflationary environment with higher interest rates and rising cost of raw materials including steel and cement have led to a slowdown in the real estate sector. Furthermore, the ongoing political uncertainty and unstable economic environment has adversely affected the sector. However, company has shown resilience and reported revenues of PKR 2,043mln (FY21: PKR 202mln). Going forward, cash flows requirement for the development and construction expenditure of projects is mainly planned to be met through advance booking receipts and working capital lines availed from the bank, the leveraging of the company stood at 64% by end Dec-22. The company’s capacity to repay its current borrowings is stressed and dependent on the regular collections as well as the launching of new project. Timely completion of projects milestones without any significant cost overruns and maintenance of sales and collection efficiency will remain critical to avoid cash flow mismatch over the construction period of the project.
Rating Watch signifies the prevailing uncertainty pertinent to company’s financial muscles, and timely debt servicing. Furthermore, Ratings assigned to the Company takes into account the comfort from the association of its sponsors who are amongst the well-established players in the oil marketing and distribution segments, namely Gas & Oil Petroleum and Sitara Petroleum. Other than real estate the group also has presence in oil logistics, and in organic farming segments of the economy. Ratings takes comfort from the land bank available to the company and moving forward the company will launch a new project for which the studies are in initial phase.
Sitara Heights (Pvt.) Limited (the company) was incorporated in Pakistan in 2019 as a private limited company under the companies Act 2017. The principal line of business of the company is development of residential and commercial properties including communities and apartments, Currently the company is engaged in five projects, three in Lahore and two in Faisalabad. Mr. Khalid Riaz holds majority shareholding of 97%. The BoD consists of three members from the sponsors family with Mr. Khalid Riaz is the Chairman. The organization has a lean structure with each department being headed by a competent resource.