PACRA Assigns Initial Ratings to Ismail Industries Limited - PPSTS-7 - PKR 8bln – Aug-26

The assigned ratings of the instrument reflect the credit strength of the issuer, Ismail Industries Limited (“IIL” or “the Company”), supported by its entrenched market position, resilient operating profile, and demonstrated ability to diversify and innovate across its core business segments. During 9MFY26, ~86% of total revenue emanated from domestic operations, while exports accounted for the remaining ~14%. (FY25: ~66%, ~34%, respectively). The Company operates through two primary divisions: Food and Plastics, contributing ~85% and ~15% to topline, respectively. Amid persistent challenges in the export market, the Company strategically realigned its commercial focus toward the domestic market, driving robust local sales and sustaining operational momentum. The ratings incorporate IIL’s sustained business growth, underpinned by prudent financial management and sound liquidity buffers. The Company’s expanding footprint is primarily driven by higher volumetric sales in the domestic market and the successful rollout of new product lines. During the year, IIL infused 100% equity amounting to USD 10 million into a newly incorporated foreign subsidiary, Bisconni Middle East Manufacturing LLC, based in Abu Dhabi, UAE. This strategic investment aims to capture the rising demand within the middle east region’s biscuit segment. IIL’s diversified brand portfolio comprising Candyland, Bisconni, SnackCity, Ismail Nutrition, Ghiza Flour, and Astro Films continue to anchor revenue stability. The assigned ratings further draw comfort from IIL’s strong organizational structure, effective oversight mechanisms, and sound governance practices, collectively strengthening its credit profile. The Company maintains notable strategic investments in subsidiaries and associates, reflecting its commitment to diversification and vertical integration. These include a ~78.53% stake in Hudson Pharma (Pvt.) Limited, engaged in the production of inhalation solutions, ophthalmic drops, intravenous infusions, and topical formulations, and a ~75% holding in Ismail Resin (Pvt.) Limited, enabling vertical integration through PET resin manufacturing. Financially during 9MFY26, IIL reported a marginal contraction in gross margins to ~19.5% (9MFY25: ~21.0%). This pressure also translated to the bottom line. Recognizing the inherent challenges in the confectionery sector, such as evolving consumer preferences and a heightened focus on health-conscious consumption, the Company continues to emphasize product innovation, including the launch of premium variants aimed at strengthening margin sustainability.
The ratings are dependent on sustained revenue growth, margin maintenance, and prudent financial management. Prioritizing brand reputation and disciplined debt management are crucial for maintaining the ratings.

About the Entity
Ismail Industries Limited (‘IIL’ or ‘the Company’), incorporated in 1988, is a publicly listed company engaged in the manufacturing and trading of sugar confectionery, biscuits, nutritional products, flour, and cast polypropylene films. The Company operates across these product segments under established brands, including ‘CandyLand’, ‘Bisconni’, ‘SnackCity’, ‘Ismail Nutrition’, ‘Ghiza’, ‘Super Cereal’, and ‘Astro Films’, respectively.

About the Instrument
Ismail Industries Limited (‘IIL’ or ‘the Company’) has issued a rated, privately placed, unsecured Short-Term Sukuk (PPSTS-7) amounting to PKR 8.0 billion, including a PKR 3.0 billion green shoe option, in August 2026 to finance its working capital requirements. The Sukuk carries a six-month tenor and is scheduled to mature in February 2027. It carries a profit rate of 3MK + 0%, with KIBOR subject to reset after three months. The principal amount and accrued profit are payable in a single bullet payment at maturity.