PACRA Maintains Entity Ratings of Ibrahim Fibres Limited

Ibrahim Fibres Limited (‘IFL’ or ‘the Company’) is principally involved in the manufacturing & sale of Polyester Staple Fibres (PSF) and Yarn. The ratings reflect IFL’s long-standing presence, underscoring a commitment to innovation and technological excellence. The company's state-of-the-art equipment facilitates the production of high-quality fibers, while its consolidated operations, comprising Polyester Plants and Textile Spinning Plants, are fortified by in-house power generation plants utilizing HFO, Gas, and Coal. The company boasts a combined annual capacity of 390,600 tons of PSF and 240,192 spindles for spun yarn, solidifying its position as a major player in Pakistan’s textile industry. IFL reigns supreme in Pakistan’s PSF market, boasting a commanding (68%) share, followed by Lucky Core Industries (27%) and Rupali Polyester (5%). Globally, the Asia-Pacific region is viewed as principal market for polyester demand on account of expansion in textile sector. Pakistan’s PSF industry has shown growth over the period owing to build up consumption of polyester throughout the textile chain like spinning, weaving, dyeing, composite, etc. Amidst Pakistan’s ever-shifting economic landscape, the PSF sector charts its course, navigating challenges like reduced demand influenced by high inflation, rising interest rates, swollen energy & raw material costs. Industry remained under pressure due to slow off-take in downstream markets resulting from the global economic situation amidst monetary tightening. A significant challenge confronting the local PSF industry is the presence of competitively priced imported PSF in the local market. This is putting pressure on the margins of local manufacturers and leading to a reduction in their capacity utilization. During the year, the company recorded historic sales at the end of Dec’23 amounting to ~PKR 119bln, reflecting a growth of ~4% mainly due to price inflation. Moreover, the company’s margins showed dilutions at all levels. To combat these challenges, IFL stays committed to continuously striving for cost efficiency, through BMR, process automation and prudent CAPEX in the latest technology. IFL steadfastly upholds its loyalty to its customers, ensuring timely price adjustments to navigate market fluctuations and sustain mutually beneficial partnerships. The expansion shall be undertaken with predominantly internally generated cash flows. The financial risk profile of the Company is demonstrated strong, powered by robust cash flows and healthy coverages. IFL’s capital structure is considered low-leveraged; short-term borrowings to serve its working capital requirements and long-term borrowings for CAPEX. The ratings further incorporate the Company's prime association with the Ibrahim Group, which has demonstrated strong sustenance.
The ratings are dependent on the Company’s ability to sustain its position in the local PSF industry, coupled with topline growth and increase in profitability amid challenging economic conditions. Optimal utilization of its capacities enhancement and resulting improvement in margins will remain important.

About the Entity
Ibrahim Fibres Limited, incorporated in 1986 and listed on Pakistan Stock Exchange, is engaged in the production & marketing of PSF and yarn. Its production facilities are located at Shahkot near Faisalabad. Ibrahim Group holds majority stake (~91.63%) in Ibrahim Fibres through Group holding entity, Ibrahim Holdings (Private) Limited. The Company’s Board of Directors comprises seven members, including the Chairman, Mr. Sheikh Mukhtar Ahmed and CEO, Mr. Mohammad Naeem Mukhtar. The remaining members comprise three Ibrahim Group affiliates and two independent members. All Board members have significant industry-related experience.