PACRA Maintains Entity Ratings of Hadeed Pakistan (Pvt.) Limited

Hadeed Pakistan (Private) Limited (“Hadeed” or “the Company”) is a family-operated business and the only Cold Rolled Coil (CRC) manufacturer in Central Pakistan, providing it with a distinct geographic advantage over southern-based peers. The Company further differentiates itself through its proprietary 6-high cold rolling mill technology, which enables superior surface finish, improved flatness control, and tighter thickness tolerances. Operating through a fully integrated facility the Company primarily serves the automotive sector. Recently the Company’s customer strategy has gradually shifted toward increasing the share of direct corporate customers relative to distributors in order to improve margins and strengthen end-user relationships. While this transition supports profitability and market positioning, it has also contributed to a slight increase in receivable days. Since commencing operations in FY19, the Company has demonstrated significant growth in its market position, with CRC sales volumes reaching approximately 94,486 tons in FY25 and its market share expanding from approximately 7% in FY20 to around 30% in 9MFY26. Raw material procurement remains import-dependent, with HRC sourced primarily from Japan. This exposes the Company to international steel price movements, exchange rate fluctuations, and potential supply chain disruptions. During the recent USA-Iran conflict, elevated freight, insurance, and shipment costs increased procurement expenses and pressured margins, though raw material availability remained uninterrupted throughout the period. During 9MFY26, the Company maintained stable financial performance. Net sales grew by 2.2% to PKR 14.882 billion, driven entirely by domestic sales growth, while gross profit margins held largely steady at 8.7% and net profit margins stood at 2.8%. The decline in finance costs, attributable primarily to monetary easing, contributed to a meaningful improvement in interest coverage, which strengthened from 3.6x to 4.6x. Capitalization metrics remains largely stable, with gearing ratio recorded to 43.7% as of 9MFY26 compared to 46.3% at June 2025. Working capital requirements continued to be managed through internal cash generation, although the utilisation of working capital lines remained comparatively higher on a year-on-year basis due to increased short-term borrowings undertaken to finance raw material procurement. Nevertheless, overall working capital management remained efficient, supported by improved inventory management and tighter operational cash cycle controls. Looking ahead, Hadeed plans to expand into galvanization, a move expected to diversify the product portfolio, enhance value addition per ton, and support future revenue growth. The debt associated with this planned expansion is expected to moderately increase the Company’s leverage profile over the medium term.
The assigned ratings reflect Hadeed’s established and growing position as the only CRC manufacturer in Central Pakistan, its differentiated technology platform, and its track record of improving financial metrics and disciplined working capital management. Comfort is additionally derived from the sponsors’ deep industry experience and the Company’s ongoing operational enhancements. Meanwhile, the ratings incorporate the moderate-to-high business risk profile of the flat steel sector, dependence on imported raw materials and associated commodity and currency exposures, geographic constraints relative to port-based peers, and the execution and leverage risks associated with the planned galvanization expansion. Maintaining the current financial profile, while prudently managing expansion-related funding requirements and leverage, remains important for the assigned ratings.

About the Entity
Hadeed Pakistan (Private) Limited was incorporated in 2013 and commenced commercial operations in 2019. The Company manufactures cold-rolled steel sheets and coils for the automotive, construction, engineering, and home appliances sectors. It operates a fully integrated facility with an annual rolling capacity of approximately 300,000 MT, with further expansion currently underway. The leadership team, led by Mr. Hamid Daud (CEO), brings extensive industry experience to the Company.