The Pakistan Credit Rating Agency Limited
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Iqra Toqeer

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PACRA Assigns Positive Outlook to Nishat Hotels and Properties Limited

Rating Type Entity
(16-Jun-23 )
(24-Jun-22 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Positive Stable
Rating Watch - -

Nishat Hotels & Properties Limited (‘NHPL’ or 'the Company') primarily owns, manages, and operates a shopping mall, hotel, and banquet halls under the name of ‘Nishat Emporium’ and ‘Nishat Hotel'. The Company also operates in the real estate business under the name of ‘Nishat Residences’ that mainly comprise of residential apartments. NHPL’s ratings reflect a prominent business profile and a solid brand name in the hospitality and real estate segments. The Company has set up multiple projects comprising state-of-the-art infrastructures. The ratings take comfort from the Company’s association with Nishat Group, one of the leading business conglomerates in Pakistan. Over the years, Pakistan’s hotel and retail industry has witnessed growth and transformation, driven by various factors such as increasing consumer spending, a growing middle class, urbanization, and improved infrastructure. These dynamics have created new opportunities and challenges for businesses operating in the sector. Both domestic and international hotel chains have recognized the potential of Pakistan's hospitality sector. Major hotel brands are entering the market or expanding their existing properties to cater to the rising demand for quality accommodations, including luxury, business, and budget segments. Accordingly, the Company is also able to achieve operational sustainability. Further, the hotel occupancy rates and average daily room rates have shown considerable improvements which translated into better financial performance. Commercial and business activities in Emporium Mall have also shown a rising trend and achieved splendid footfall during period under review, showing positive indication. In the real estate business segment, sales of apartments in the Nishat residences are striding. The Company has benefited from a strong governing board, and operations draw support from skilled and professional management. Financial risk profile of the Company is considered adequate with comfortable coverages, cash flows, and working capital cycle. Capital structure is leveraged where borrowings are mainly comprised of long-term borrowings.
The ratings are dependent upon the sustainability of operations amid changing business environment, and improvement in revenues & margins. The Sponsor’s support and future cash flows from the sale of apartments are vital. At the same time, management of financial risk, particularly debt coverages, remain important, also consistency in the performance indicators will have a positive impact on the ratings.

About the Entity
Nishat Hotels & Properties Limited is a venture of Nishat Group - the country's leading business group having strong credentials in managing ventures in the textile, cement, energy, hospitality, and financial sectors etc. The Company is owned by sponsors of Nishat Group; the Mansha family and associated companies. The Company’s seven-member board of directors comprises four representatives of the sponsoring family along with three executives from group companies. Mr. Hassan Mansha, the CEO, is the leading person, engaged in multiple ventures of the group.
Emporium mall sprawls across an area of 15 acres and comprises an eleven-story hotel with ~198 hotel rooms, a shopping mall consisting of 195 shops and 109 Kiosks, a food court catering to over 30 international and local chains, a multiplex cinema of 9 screens, 9 banquet halls and 7 board rooms with a combined capacity of over 5,000 people and a parking space of 2,500-3000 cars.

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.