The Pakistan Credit Rating Agency Limited
19-Nov-18
Analyst
Ayesha Qasim
ayesha.qasim@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-18
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-18
Related Research
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PACRA Maintains Entity Ratings of Pakistan Services Limited
| Rating Type | Entity | |
|
Current (19-Nov-18 ) |
Previous (29-Mar-18 ) |
|
| Action | Maintain | Maintain |
| Long Term | A+ | A+ |
| Short Term | A1 | A1 |
| Outlook | Stable | Stable |
| Rating Watch | - | - |
Ratings reflect Pakistan Services Limited’s (The Company) strong position in the hospitality industry as the market leader drawing comfort from the Company’s association with Hashoo Group. Pakistan Services Limited has witnessed growth over the years (in line with Industry dynamics) amid improving security conditions and progression of CPEC with stable margins. However, on going political scenario impacted the Company's profitability and coverages negatively during 3MFY19. The Company has modest leveraging. Relatively higher borrowings and rising interest rates have put coverages under pressure. This trend is expected to continue till cashflows from new properties start flowing in. The Company has sufficient liquid investments and cash to meet its obligations during FY19. Going forward, the Company is taking cost control measures to improve margins and is making sizable investments in development of new properties which are expected to augment its revenues.
Ratings are dependent on effective implementation of envisaged strategy while maintaining modest leveraging and improving coverages. Any significant delay in commencement of new projects, deterioration in margins/coverages and material dilution in liquid investments (other than debt repayment) will have a negatively impact on ratings.
About
the Entity
Pakistan Services Limited was established in 1958 and is quoted on Pakistan Stock Exchange. It owns and operates Pearl Continental Hotels – the largest hotel chain of the country with 1,526 rooms. Major shareholding (~89%) lies with Hashoo Group. The Group is one of the leading business conglomerates of Pakistan and has business interests which span across various sectors both locally and globally.
The Company has a nine member BoD, with one independent member. Mr. Sadruddin Hashwani – founder of the Hashoo Group – chairs the board. He has experience of over 5 decades of managing different businesses. Mr. Murtaza Hashwani acts as the Chief Executive Officer.