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The Pakistan Credit Rating Agency Limited
Press Release

Date
27-Dec-19

Analyst
Muhammad Fahad Iqbal
fahad.iqbal@pacra.com
+92-42-35869504
www.pacra.com

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This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Nishat Hotels and Properties Limited

Rating Type Entity
Current
(27-Dec-19 )
Previous
(28-Jun-19 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Nishat Group, through Nishat Hotels & Properties Limited, has set up a project comprising a state of the art shopping mall, a luxury hotel and banquet halls. The ratings reflect the Company's association with Nishat Group, one of the leading business conglomerates of Pakistan, and expected group support. With the mall operating at full capacity, the Company’s main focus is now on increasing occupancy rates from hotel operations which has resulted in better performance of the Company. Here, expansion and change in management are expected to have positive results. Although the Company maintains profitable operations, it has yet to completely turn around and generate a positive bottom-line. Financial profile remains stretched due to high leveraging, large repayments and weak coverages. Adequate financing facilities provide some cushion to meet payments in a timely manner. Increase in borrowings and rising interest rates would further suppress coverages, exerting pressure on the Company. Ratings take comfort from demonstrated group support. Going forward Company is looking to merge with Nishat (Gulberg) Hotels and Properties Limited (Nishat Residency) which will in turn result in increased topline in coming years.
Increasing cashflows from hotel operations and operating the mall at optimal capacity are imperative. Timely arrangement of financing to repay obligations is crucial. Any significant deterioration in this and/or margins leading to lower cashflows will have a negative impact on ratings. Meanwhile, given sizable leveraging and debt obligations, group support remains critical for the ratings.

About the Entity
Nishat hotels & Properties Limited (Nishat Hotels) is a venture of Nishat Group - the country's leading business group having strong credentials of managing ventures in the textile, cement, energy, hospitality and financial sectors. The Company is majority owned by Mansha family (90%), the sponsors of Nishat Group. The other shareholder is Allied Bank Limited (10%). The Company’s seven member’s board of directors comprises four representatives of the sponsoring family along with three executives from group companies. Mr. Hassan Mansha, the CEO, is leading power and hospitality ventures of the group.
Emporium mall - Biggest Mall of the country - sprawled across an area of 15 acres, comprises a twelve storey hotel with ~198 rooms, a shopping mall of 140 shops, a food court catering 30 international and local chains, a multiplex cinema of 9 screens, 6 banquet halls with a combined capacity of 5,000 people and a parking space of 2,000 cars. The project was constructed with a total cost of PKR 25.2bln.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.