Fitch Ratings has upheld Sierra Cables PLC’s National Long-Term Rating at ‘A+(lka)’, with a Stable Outlook, indicating confidence in the company’s ability to maintain stable financial metrics over the next year. The affirmation reflects the anticipation of Sierra sustaining its financial health amidst an improving landscape in Sri Lanka’s external finances and lower domestic interest rates. With these factors, more construction projects are expected to resume, positively impacting Sierra’s cash flow.
Sierra’s rating acknowledges its relatively modest operating scale and exposure to cyclical markets, alongside foreign-currency risks. However, these concerns are offset by Sierra’s strong position within the domestic cable industry. Despite its notable market position, Sierra faces liquidity constraints due to significant short-term debt and relies on lenders’ willingness to extend working-capital facilities.
Fitch’s affirmation of Sierra’s rating underscores the company’s resilience and strategic positioning within the industry. While facing challenges inherent to its sector, Sierra’s stable outlook suggests a capacity to navigate market fluctuations and maintain financial stability. This rating provides investors with valuable insights into Sierra’s creditworthiness, informing investment decisions in the dynamic economic environment.