PACRA Assigns Initial Ratings to Select Technologies Limited | PPSTS-VI | PKR 3.0bln | Jul-26

Select Technologies Limited (hereafter ‘SELECT’ or ‘the Company’) has issued its sixth Rated, Secured, Privately Placed, Short-Term Sukuk-VI on July 14th, 2026, valued at PKR 3.0 billion. The underlying instrument is secured by a ranking charge over the Company’s current assets. To ensure repayment discipline, the Issuer shall maintain a lien-marked Debt Payment Account (“DPA”) with the Investment Agent, depositing PKR 750 million at least 47 days before maturity, and every fortnight thereafter, such that an amount equivalent to full issue amount is available in the DPA 05 days before the maturity date. SELECT is a wholly owned subsidiary of Air Link Communication Limited (AIRLINK), engaged in the manufacturing, assembly, and sale of Xiaomi smartphones, Xiaomi TVs, Hisense TVs, and Hisense ACs in Pakistan. The Company has been listed on the Pakistan Stock Exchange (PSX) after a successful Initial Public Offering (IPO). Backed by its parent’s support and a sustainable business model, the Company has established a strong position in Pakistan’s technology sector. During 6MCY26 (Jan–Jun '26), local mobile phone production declined ~8% YoY to 13.10 million units, comprising~7.32 million 2G phones and ~5.78 million smartphones, while commercial imports rose sharply (~197% YoY) to2.55 million units, lifting total mobile phone supply ~4% to 15.65 million units; local assembly nonetheless continued to meet ~85% of domestic demand. During 9MFY26, the Company’s topline declined ~37.1% to ~PKR 23,052 mln (FY25: ~PKR 48,893 mln). The decline reflects both the phase-out of high-volume, low-margin 4G devices as Select shifts its product mix and softer industry-wide smartphone demand. Despite lower sales, profitability improved, with gross, operating, and net margins reaching ~16.2%, ~13.4%, and ~5.8%, respectively. Select continues to fund its working capital requirements through a combination of bank borrowings and short-term debt instruments. The Select's long-term syndicated facility, ~59.1% drawn (PKR 1.95bln), has been deployed towards capital expenditure for the new Sundar facility. Of SELECT's ~PKR 3.02bln IPO proceeds, ~43% (~PKR 1.3bln) supports incremental working capital arising from product diversification, facilitating a partial replacement of short-term borrowings with equity. Although gross leverage remains elevated, net leverage, after adjusting for cash, guarantee margins, and the strengthened equity base post-IPO, remains within a targeted range. Furthermore, the disciplined maintenance of the DPA, funded through internal cash generation, provides an additional liquidity buffer and mitigates refinancing risk. Going forward, the management is expecting improvement in profitability after execution of the new initiatives.
Sustained compliance with a pre-agreed financial matrix, reflecting adherence to a well-defined and disciplined financial framework, remains important. Furthermore, the successful execution of the planned deleveraging strategy, supported by optimal deployment of syndicated financing and IPO proceeds, along with the successful market penetration of newer product categories and scale-up of the SGSEZ facility, prudent liquidity management, and efficient working capital discipline, shall remain imperative.

About the Entity
Select Technologies Limited was incorporated in Pakistan on October 13th, 2021, as a private limited entity. The Company was successfully listed on the PSX on July 13, 2026, following the completion of its IPO. The Company’s majority stake rests with AIRLINK (parent company).

About the Instrument
Currently, SELECT’s PPSTS-V and PPSTS-VI of PKR 3.0bln each are the available sukuks in the market. The PPSTS-VI will carry a markup of 6MK+1.10% with a tenure of six (6) months, and will be redeemed in bullet at the expiry of Tenor. Additionally, the Issue is backed by a corporate guarantee from its parent company, AIRLINK, covering the outstanding issue amount along with any accrued markup throughout the tenor of the Issue.