PACRA Upgrades the Entity Ratings of Ghandhara Automobiles Limited

Ghandhara Automobiles Limited ("GAL" or "the Company") is a listed entity engaged in the distribution and supported assembly of commercial vehicles in Pakistan. Operating under the Bibojee Group of Companies, GAL benefits from group synergies across automobiles, textiles, insurance, construction, and tyres. The Company maintains strategic collaborations with Anhui Jianghuai Automobile Co. Ltd. (JAC Motors), China, for light, medium, and heavy-duty trucks, complemented by brand associations with Dongfeng and Renault Trucks. In the pickup segment, the JAC T9 Hunter (4x4) and the T9 Frison (4x2), launched in October 2025, sustained strong market acceptance during FY26 owing to attractive features and competitive pricing, while a Plug-in Hybrid Electric Vehicle (PHEV) variant is planned for January 2027. Governance remains central to GAL's operations, with an independent Board and a professional management team ensuring transparency, accountability, and strategic oversight. The rating upgrade reflects the Company's strengthened business and financial profile, driven by sustained revenue growth for a second consecutive year, continued improvement in profitability, and market share gains in both the trucks and pickup segments, while new launches have broadened its product offering. Capacity utilization has exceeded the plant's designed single-shift capacity, and the ongoing Paint Shop upgrade, including a Robotics Top Coat Line, is expected to support further volume growth. The Company operates at a near debt-free position, backed by strong cash flow coverages and a rising earnings contribution from its associate, Ghandhara Industries Limited. The upgrade also considers a supportive demand environment, although sensitivity to interest rates and the gradual tariff liberalization envisaged under the new auto policy remain key considerations. At the industry level, the trucks and buses segment is inherently cyclical and closely aligned with economic activity, logistics demand, and infrastructure development. Sales volumes rose to ~8,424 units in FY26 (FY25: ~5,232 units), a robust ~61% YoY increase on top of ~98% growth in FY25, driven primarily by lower interest rates and improved access to auto financing, and further supported by exchange rate stability, industrial revival, and GDP growth of ~3.7%. The Automotive and Auto Parts Manufacturing Policy 2026–31, which received in-principal approval in September 2026, along with fleet modernization under the NTP-2018, is expected to stimulate demand for modern, fuel-efficient and new energy vehicles. According to PAMA data, GAL's share in the trucks segment rose to ~10% in FY26 (778 units) from ~4% (198 units) in FY25, while its share in the LCV category, through its JAC pickups, increased to ~23% (2,443 units) from ~13% (1,274 units). During FY26, GAL assembled ~11,673 vehicles at its Port Qasim facility (FY25: ~7,799). Consequently, consolidated revenue increased to ~PKR 47.0bln in FY26 (FY25: ~PKR 34.5bln), with margins improving at all levels: the gross margin rose to ~20.4% (FY25: ~18.4%) and the net margin to ~13.6% (FY25: ~11.9%). The bottom line grew to ~PKR 6.4bln (FY25: ~PKR 4.1bln), supported by a higher share of profit from its associate. The financial risk profile is characterized by strong coverages and cash flows, although the working capital cycle lengthened as customer advances unwound. Total debt reduced to ~PKR 674mln, comprising entirely concessionary long-term borrowings with no reliance on short-term debt, resulting in a modest leverage ratio of ~3.2% (FY25: ~5.6%).
The ratings remain dependent on GAL's ability to sustain its growth momentum in revenue and profitability. The adequacy of operating cash flows to meet working capital and expansion needs will be critical. Effectively managing competition and improving its relative position shall remain imperative. Furthermore, GAL's strong commitment to regulatory compliance and governance standards continues to reinforce its operational credibility and stakeholder confidence.

About the Entity
Ghandhara Automobiles Limited (GAL), part of the Bibojee Group, was established in 1981 and listed on the PSX in 1992. The Company assembles JAC, Dongfeng, and Renault trucks at its Port Qasim facility, with an annual capacity of 11,000 vehicles and a nationwide network of 33 3S dealerships.