Pacra Maintains the Entity Ratings of Liberty Mills Limited

Liberty Mills Limited ("LML" or "the Company") is a prominent player in the competitive textile landscape. This stems from the Company’s established market position, vertically integrated operations, diversified value-added product portfolio, and sustained presence in international export markets. LML is the flagship entity of the Liberty Group and is recognized among Pakistan's leading value-added textile exporters. The Company’s product portfolio comprises three business segments: Home Textiles, Healthcare Textiles, and Apparel. Over the years, LML has established a strong presence in the international market by serving leading retailers and institutional buyers across the globe. The Company operates across the entire textile value chain, from spinning to finished value-added products, enabling greater operational efficiencies, enhanced quality control, and manufacturing flexibility. During 1HFY26, the Company generated revenue of PKR 45.3bln (FY25: PKR 80.2bln), reflecting the resilience of its business profile amid a challenging operating environment.

The Company continues to pursue a profitability-driven strategy focused on operational efficiency and cost optimization. The management has undertaken significant investments in renewable energy projects, including solar and wind power generation, to improve energy efficiency and strengthen long-term cost competitiveness. Furthermore, LML maintains a sizeable strategic investment portfolio comprising investments in group companies and mark-to-market holdings in blue-chip listed companies. This provides meaningful financial flexibility through recurring dividend income and potential capital gains, supplementing the Company's profitability matrix. Despite elevated finance costs and higher taxation expenses weighing on the bottom line, the Company reported a profit after tax (PAT) of PKR 2.9bln during 1HFY26 (FY25: PKR 6.2bln).

The Company's financial risk profile remained adequate, underpinned by a strong liquidity profile and prudent financial management. Working capital requirements continue to be primarily financed through short-term borrowings, while the capital structure was moderately leveraged. A meaningful proportion of the debt portfolio comprises concessionary financing facilities obtained under the State Bank of Pakistan's subsidized schemes, providing stability to the Company's funding profile and moderating its financing costs. The gradual easing of the monetary environment has led to an improvement in debt coverage metrics, further strengthening the Company's financial flexibility. On the strategic front, management does not envisage any major expansion in the near term and remains focused on strengthening its core business through operational efficiencies, cost optimization, and sustained value creation.
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The ratings are dependent on the Company’s ability to sustain its product diversity and volumetric growth while maintaining margins and profitability matrix at an optimal level. The maintenance of the debt matrix and improvement in coverages coupled with continuity in generating cashflows from core business operations remain imperative for the assigned ratings.

About the Entity
Liberty Mills Limited (“LML” or “the Company”) is an unlisted, public limited concern incorporated in 1964. It is engaged in the business of manufacturing and processing textile fabrics and made-ups. It operates a spinning unit with 11,160 rotors/spindles with a production capacity of 1,700 bags per day and Air Jet & Sulzer weaving unit of 145 & 110 looms with a production capacity of 130,000 meters of fabric per day in the Nooriabad & Karachi locations.