Fitch Ratings has affirmed Sri Lanka-based consumer and healthcare company Hemas Holdings PLC’s National Long-Term Rating at ‘AA-(lka)’ with a Stable Outlook.
The affirmation reflects the limited vulnerability of the company’s largely defensive operating cash flows to disruptions from the coronavirus pandemic and the resultant economic downturn. Pharmaceutical trading and manufacturing as well as fast-moving consumer goods (FMCG) in home and personal care, and stationery account for over 80% of the group’s EBIT.
The rating also benefits from the company’s exceptionally strong balance sheet and high rating headroom before the economic downturn, and we estimate steady leverage of around 0.4x-0.5x in the year ended March 2020 (FY20) and FY21 compared with the 3.0x leverage threshold for the current rating.
Hemas also disposed of two of its smaller non- core businesses in FY20, which will improve the group’s profitability starting FY21, even as its exposure to the hotel sector weighs on its financial profile.
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