Pakistan Credit Rating Agency maintains Entity Ratings of National Power Construction Corporation Limited

Lahore: PACRA has maintained the long-term and short term ratings of NPCC at “A” (Single A) and “A1” (A one), respectively. The ratings denote a low expectation of credit risk emanating from a strong capacity for timely payment of financial commitments.

The ratings reflect the company’s relatively low business risk arising from its established market position and track record in its niche market – design-construct power transmission segment – in Saudi Arabia. Meanwhile, the ratings recognize the company’s debt free capital structure along with sound liquidity profile. However, relatively lower nominal quantum of available funds restrains the company’s ability to grow due to increasing size of upcoming contracts. The strength of the corporation’s management in terms of their technical expertise, business know-how and resourcefulness are key rating factors.

The ratings are dependent on the management’s ability to maintain its market standing while acquiring new projects and managing its margins in a highly competitive environment. Meanwhile, any significant debt acquisition to finance volumetric growth in its top-line would have a negative impact on the ratings. The privatization of NPCC, if and when materialized, may also affect the ratings. However, the direction of this rating movement would remain contingent on the profile and strategy of the acquirer.

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