Mughal Steel maintains long-term credit rating with stable outlook

Pakistan Credit Rating Agency (PACRA) has maintained the long-term entity rating of Mughal Iron & Steel Industries Limited (Mughal Steel) at A+ and its short-term rating at A1, both with a stable outlook. The ratings were reaffirmed on October 15, 2026.

In FY26, Mughal increased sales volumes in its ferrous segment, supported by higher production and improved capacity utilization at its melting furnaces and rolling mills, which reached around 59pct and 52pct, respectively, compared with 51pct and 48pct in FY25. Major works on the balancing, modernization and replacement (BMR) of its bar re-rolling mill have been completed, with the upgrade expected to improve operational efficiency and product flexibility.

The company’s net sales declined to PKR 77.96 bln (USD 281 mln) in FY26 from PKR 89.41 bln a year earlier, mainly due to lower average selling prices and reduced exports. However, gross margin improved to 11.1pct from 9.1pct, while net margin rose to 3.2pct from 1.08pct, supported by operational efficiencies, a favourable sales mix and lower finance costs. The ferrous segment accounted for around 91.5pct of revenue, while the non-ferrous segment was temporarily suspended due to volatility in international commodity markets.

Mughal’s borrowings increased to PKR 38.07 bln (USD 137 mln) from PKR 28.01 bln in FY25, mainly due to long-term financing for permanent working capital and the BMR project. PACRA highlighted the importance of sustaining profitability, managing debt repayments and maintaining working capital discipline.

The company’s subsidiary also achieved commercial operation of the main 31.5 MW turbine of its 36.5 MW captive hybrid power plant on August 31, 2026. The plant is expected to reduce energy costs and support operational efficiency.

With an annual production capacity of around 1 mln tons, Mughal Steel produces billets, rebar and structural steel products, along with copper ingots primarily exported to China.

1 USD / 277 PKR