The Pakistan Credit Rating Agency Limited
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Shayan Farooq

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PACRA Assigns Initial Entity Ratings to New Horizon Computer

Rating Type Entity
(22-Apr-22 )
Action Initial
Long Term BB+
Short Term A3
Outlook Stable
Rating Watch -

Pakistan’s tech industry contributes ~1% to national GDP through local and export sales. Export of IT services is estimated to generate a revenue of ~$2.1bln. This is expected to grow to ~$ 3.5bln by FY22. While the target is to generate ~$5bln from IT services export by FY23. The largest contributor remains IT consultancy (~33%), followed by software exports (~25%). The industry comprises ~ 7000 companies providing customized software development services and Business Process Outsourcing (BPO) services. Lately, the Government and regulatory bodies have taken initiatives such as the establishment of IT Parks and incubators to promote the industry and provide an enabling ecosystem for businesses and start-ups.
The ratings reflect New Horizon Computer's ('the business') developing business profile as an information technology (IT) services and solutions provider. The product slate of the business comprises IT based solutions, including cloud computing, data protection, backup & recovery, networking hardware & software, and ERP systems management. The business also provides Service Legal Agreements (SLAs) for repair, maintenance, and refurbishment services. The business derives revenue from the local market only. With a relatively small market share, the business has experienced an improving top line over the years. Margins, and in turn profitability have shown a fluctuating trend over the years. The financial risk profile is characterized by strong coverages, however, holds an elongated working capital cycle. Leveraged capital structure is supplemented by borrowings from the Sponsors. Sound business acumen of the Sponsors bode well for the ratings.
The ratings are dependent on the management's ability to stabilize margins and profitability, while improving financial profile of the business. Meanwhile, strengthening governance practices will have a positive impact on the ratings. Any deterioration in debt coverages leading to higher financial risk or substantial losses will have a negative impact on ratings.

About the Entity
New Horizon Computer ('the business') is an association of person (AoP). The business was registered in 2003, and is owned by Mr. Hanif Akbar Ali and Mr. Rahim Iqbal (CEO). The primary business activity involves the provision of IT based solutions. Management team comprises qualified professionals having significant experience in respective fields.

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.