PACRA Maintains the Entity Ratings of Saif Textile Mills Limited

Saif Textile Mills Limited (“STML” or “the Company”) is associated with the Saif Group, a diversified conglomerate with investments in textile, power, oil & gas, real estate, healthcare, and information technology. STML primarily operates in the spinning segment of the textile industry through a spinning unit located in Gadoon (KPK), manufacturing a diversified range of yarn products, including Accru yarn, Mélange yarn, Dyed yarn, and Surgical cotton, for both local and export markets. However, the Accru yarn accounts for the majority of the sales portion. STML also operates a dyeing facility in the same unit equipped with modern machinery sourced from Europe, Japan, and China. 
During 6MFY26, the Company's topline reached PKR 4.9bln (6MFY25: PKR 6.1bln), amid challenging market conditions characterized by softer domestic demand and lower yarn prices. Export sales also witnessed a decline of approximately 6.3% during the same period. Despite the reduction in revenue, profitability indicators improved owing to effective cost management and operational efficiencies. Gross margin strengthened to 15.3% (6MFY25: 13.1%), while operating margin improved to 10.9% (6MFY25: 9.7%). Consequently, the Company recorded a net profit of PKR ~54mln during 6MFY26 compared to a net loss of PKR ~157mlm during the corresponding period last year, translating into a net profit margin of 1.1% (6MFY25: -2.6%).
A key contributor to the improvement in profitability was Company’s cost optimization initiative by installation and commencing operations of a 10-ton per hour Bio-mass boiler in September 2025; enabling in house steam generation and reducing reliance on comparatively expensive fuel alternatives. The project has significantly reduced dependence on conventional energy sources and it is expected to generate sustainable cost savings going forward, thereby supporting margins and enhancing operational efficiency. Further, continuing the cost optimization drive, the Company has successfully installed and commissioned the 10 MW Solar Power Plant subsequently in April-2026, which will further contribute in profitability and sustainability of the Company.
The Company’s financial risk profile remains characterized by a leveraged capital structure, with total leveraging standing at 67.9% as at end-6MFY26. Nonetheless, total borrowings declined to PKR 5.0bln (6MFY25: PKR 5.1bln), primarily driven by a 2.6% reduction in short-term borrowings, reflecting lower working capital requirements and improved liquidity management. The improvement in profitability, coupled with lower financing requirements, has provided support to the Company’s credit profile. Going forward, sustained profitability, prudent working capital management, and further deleveraging will remain important for strengthening financial risk indicators. Management remains focused on improving capacity utilization, strengthening its presence in export markets, and maintaining prudent cost controls to navigate prevailing industry challenges.
The ratings are underpinned by the sponsors' ongoing financial commitment to the Company. While generating sufficient cash flows to support Company operations on a standalone basis, and maintaining the profitability matrix at an optimal level. The adherence to the debt matrix at an optimal level is a prerequisite for the assigned ratings. 

About the Entity
Saif Textile Mills Limited (“STML” or “the Company”) was incorporated in 1989. Being a publicly listed entity, the Company carries a market capitalization of approximately PKR 950mln and maintains a free float of around 50%.  Saif Holdings owns a 49.59% stake in the Company, followed by NIT (5.80%) while the remaining 44.61% comprises free float. The Board of Directors comprises eight members, including the Chairman, Mr. Javed Saifullah Khan. Mr. Assad Saifullah Khan is the CEO of Saif Textile Mills Limited and Abid Hussain as the Executive Director, Finance & Operations, bringing diversified experience into the textile sector. The management has sufficient experience and has shown historic progress/growth in the other associated Company in the textile sector.