PACRA Assigns Initial Ratings to Daewoo Pakistan Express Bus Service Limited | PPSTS-III | PKR 4.0bln | Aug-26

Daewoo Pakistan Express Bus Service Limited (“DPEBSL” or “the Company”) has issued its Third Rated, Secured, Privately Placed, Short-Term Sukuk-III of PKR 4,000 million (inclusive of a Green Shoe Option of up to PKR 2,000 million). The underlying instrument is secured by a ranking charge over the Company’s current assets, including receivables with a 25% margin. In addition, the Company has provided undertakings to ensure that sufficient cushion in current assets will be maintained throughout the tenor of the Sukuk, thereby preserving the adequacy and enforceability of the security package on an ongoing basis. To further strengthen the seniority position of Sukuk holders, the Company has also undertaken to keep Running Finance limits equivalent to the outstanding Sukuk amount unutilized at all times during the tenor. To ensure repayment discipline, the Issuer shall maintain and efficiently manage a Debt Payment Account (DPA) under lien of the Investment Agent to be built up in the last 15 days of Sukuk Maturity, with complete funding to be arranged 1 working day before the Maturity Date. To support resulting working capital needs, the Company has issued this new short-term sukuk of PKR 4,000 million. DPEBSL, established in 1997, is a leading intercity transport and logistics operator in Pakistan, managing over 400 buses, 200 cargo trucks, and 200+ delivery centres. The Company has expanded into regulated public sector mass transit projects, including Lahore Feeder, Multan Metro, Orange Line Lahore, BRT Peshawar, and BRT Karachi, capturing ~70% market share, and recently launched the Daewoo Waste Management Division under the “Suthra Punjab Initiative,” covering 22 tehsils with AI-based monitoring and KPI-linked operations. The rating is supported by stable ownership and governance, professional management, and robust internal controls. The company has three of its already established and historical business lines: intercity, intracity, and cargo. It has added the fourth one lately – waste management. Hence, DPEBSL has a well-diversified revenue base. The Company's revenue momentum continued into 6MCY26, with revenue reaching ~PKR 31,581 million for the period, reflecting growth of ~34.7% on an annualized basis (CY25: ~PKR 46,880 million, up ~79.9% YoY). This shift is most visible in 6MCY26, with the Waste Management segment now accounting for ~53.7% of total revenue (CY25: ~40.6%), driven by expanded operational scope and increasing project traction under the Suthra Punjab initiative, while the core transport segments' share moderated, with intercity operations contributing ~22.1% (CY25: ~27.5%) and intracity operations ~19.3% (CY25: ~26.4%); cargo services held broadly stable at ~4.9% of the mix (CY25: ~5.5%). The leveraged capital structure increased further in 6MCY26, with total borrowings rising to ~PKR 17,136 million (CY25: ~PKR 11,641 million), primarily due to long-term CAPEX financing and short-term working capital requirements, especially for waste management.
The ratings are contingent on the Company’s ability to sustain its revenue growth while maintaining a healthy profitability matrix. Adherence to strong financial discipline and compliance with the terms of the instrument are essential.

About the Entity
DPEBSL, incorporated in 1997, operates passenger, cargo, and mass transit services in Pakistan, with 95.47% owned by Liberty Daharki Power Ltd., ultimately owned by Mr. Shaheryar Arshad Chishty. The management team is led by CEO Faisal Imran Malik.

About the Instrument
The Company has issued three PPSTS instruments: PPSTS-I (PKR 2.0bln), which has been fully repaid; PPSTS-II (PKR 4.0bln), maturing in September 2026; and PPSTS-III (PKR 4.0bln), maturing on February 5, 2027, with a six-month tenor at 6MK+2.50%, to support working capital requirements.