The rating reflects GSHPL’s established market position in pharmaceutical distribution, its diversified operations across eight healthcare verticals, and a strong financial profile characterized by low gearing of ~16.4%,(FY25:~24.4%) and sustained profitability. The operations of GSHPL include sourcing from suppliers, warehousing, sales and storage, with third-party logistics (3PL) services. The Company has a total workforce of ~546 employees, of which ~450 are engaged in sales and promotional activities. During FY25, GSHPL recorded revenue of LKR ~10.91 bln (LFY24: KR ~10.02 bln). The revenue growth was muted as several new formulations and initiatives of the Company awaited regulatory approvals. In 1HFY26 revenue reached LKR~6.64 bln and is projected to post ~10% growth for the full year. The Company reported a Net profit margin of ~6.9% in 1HFY26 (FY25: ~6.5), reflecting steady profitability. This was supported by improved operating environment with stable currency, low inflation and interest rates. The Company effectively manages its working capital and has strong liquidity. Interest coverage remained strong at ~19.1x (FY25:~11.9x), with a debt payback ratio of 0.7x (FY25:~1.4x), reflecting low leverage and robust coverage ratios. The rating incorporates the corporate guarantee provided in favor of George Steuart & Company (Pvt.) Limited (GSCPL), its parent and group holding Company. The guarantee relates to a LKR 500 million zero-coupon debenture issued by GSCPL to support other group companies.
The pharmaceutical industry in Sri Lanka operates under a regulatory framework overseen by the National Medicines Regulatory Authority (NMRA), with price controls on essential drugs. Industry reliance on imports from countries including India, USA, China, Thailand, Korea, Pakistan, and Bangladesh exposes Companies to supply chain and currency risk. GSHPL has taken steps to mitigate import dependence through a local manufacturing joint venture.
The rating remains sensitive to GSHPL’s ability to improve its market share, sustain financial discipline, and navigate regulatory or economic shifts impacting the pharmaceutical sector. Any material deterioration in revenue, profitability, cash flow generation, or regulatory compliance could have negative rating implications.