PACRA Maintains the Entity ratings of Fazal Holdings (Pvt.) Limited

The ratings reflect the established position of Fazal Holdings (Private) Limited (“Fazal Holdings” or “the Company”) as a diversified investment holding entity associated with the Fazal Group, one of the leading textile conglomerates of South Punjab. The Company’s investment portfolio is split between strategic holdings (~39%) and a trading portfolio (~61%), spread across key sectors of the economy. Within the strategic holdings, the principal investment is Fazal Cloth Mills Limited (“FCML”), a renowned name in Pakistan’s spinning sector. FCML aims to strengthen its existing vertical integration while offering premium-quality products at competitive prices in local and international markets, and specializes in greige fabric and a wide range of yarns, including multi count, multi twist, double, zero twist, organic, Supima, Lycra, Giza and USA cotton yarns. The trading portfolio, valued at PKR 19.09bln as of March 2026 (June 2025: PKR 14.49bln), is invested mainly in blue chip equities across fertilizers, commercial banking, cement, oil and gas exploration, pharmaceuticals and consumer goods, with fertilizers and commercial banks forming the larger share, alongside a small allocation to mutual funds. This Composition effectively balances capital growth with income generation, while defensive and consumer driven stocks add resilience, Overall, the portfolio remains highly liquid, actively managed, and strategically aligned with prevailing market conditions.
On a standalone basis, Fazal Holdings reported a profit after tax of PKR 3.39bln in 9MFY26 (9MFY25: PKR 4.19bln), down ~19% YoY. The moderation stemmed from lower unrealized gains on the trading book, which fell to PKR 2.29bln (9MFY25: PKR 3.69bln) amid a decline in the KSE100 Index on geopolitical uncertainty. However, the impact was partially mitigated by higher dividend income of PKR 714mln (9MFY25: PKR 593mln) and a net taxation credit, while the short-term investment portfolio grew by ~32% during the period, driven by additional investments and unrealized gains. The financial risk profile remains sound, anchored by a strong equity base of PKR 28.5bln (FY25: PKR 24.8bln) and a low leveraged capital structure, with leveraging standing at ~16.6% (FY25: ~14.2%). The uptick reflects higher borrowings, as short-term borrowings increased to PKR 2.98bln (FY25: PKR 1.40bln) alongside long-term borrowings of PKR 2.7bln, which were primarily availed to refinance short-term borrowings and optimize liquidity management. Despite the higher leveraging, the coverage ratio improved marginally to ~2.7x (FY25: ~2.5x), supported by dividend income and a lower average borrowing cost. Investment decisions are led by Mr. Rehman Naseem, supported by dedicated research and analysis resources within the Fazal Group and external brokerage houses. The sponsor profile remains strong, reflecting the Fazal Group’s longstanding track record and diversified presence in textile, fertilizer and energy, and continued sponsor support remains a key rating factor.
The ratings are dependent on the Company’s ability to sustain its investment portfolio performance amid equity market volatility, supported by stable dividend income. Containing portfolio concentration and managing leverage and liquidity as short term borrowings rise remain important, along with the performance of the strategic investment and continued sponsor support.

About the Entity
Fazal Holdings (Private) Limited was incorporated in April 1995 and rebranded in 2016. It operates as the holding company of the Fazal Group, overseeing strategic investments in its affiliated entities while managing a diversified portfolio of short-term investments in listed and unlisted securities. The Company is predominantly owned by the Fazal family, the founding sponsors, with a three-member Board from the sponsoring family.