Pakistan Credit Rating Agency (Pacra) has maintained the long-term and the short-term entity ratings of National Refinery Limited (NRL) at 'AAA' (Triple A) and 'Al+' (A One Plus), respectively. These ratings denote the lowest expectation of credit risk emanating from exceptionally strong capacity for timely payments of financial commitments.
The ratings reflect National Refinery's very strong rating risk absorption capacity emanating from a debt-free capital structure, strong cashflows and robust liquidity in the form of sizeable bank placements. This engenders capacity in the company to manage persisting inter-corporate debt prevailing in the energy chain of the country. The rating incorporate NRL's low business risk, originating from its relatively stable margins and its dominant position in the highly profitable segment. At the same time, the company enjoys synergic advantages as part of an integrated oil group, Attock Group.
The ratings could be impacted by external factors such as unfavourable movements in international oil process and adverse regulatory changes, leading to prolonged downtrodden in margins. The company's ability to maintain its leading position in the lube segment, thus sustaining profitability, and effectively mange circular debt issue to avoid stress on cash flows remain important for the ratings. Meanwhile, it is crucial that the company maintains its seamless financial profile. Any debt driven expansion has to be taken has to be taken carefully as that may impact coverage's, in turn, ratings.-PR
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