Rating Release
Agusto & Co. hereby upgrades the rating assigned to Saro Lifecare Limited (“Saro Lifecare”, “SLC” or “the Company”) to “A-”.
The rating expires on 30 June 2025
Agusto & Co. hereby upgrades the rating assigned to Saro Lifecare Limited (“Saro Lifecare”, “SLC” or “the Company”) to “A-”. The rating upgrade reflects the notable improvement in the Company’s profitability and cash flow positions on account of the efficiency in its raw material procurement and agile product pricing that has somewhat shielded its earnings from the economic headwinds of rising inflation and persistent currency devaluation. The rating also considers SLC’s low leverage and its expanding aerosol manufacturing capacity, which should sustain its market leadership status in the in-home pest control segment of the Nigerian consumer goods market. We also believe that the increased local production and raw material sourcing will help to build additional resilience against price and supply chain risks associated with imported items. The rating is however constrained by high inventory investments, which have continued to weigh on the Company’s working capital management. This is in addition to concerns over SLC’s ability to sustain its sales volume and cost pass-through pricing strategy considering the low consumer spending on non-essential items and the intense price competition across its product range.
Saro Lifecare Limited, an indigenous player in the consumer goods market in Nigeria, specialises in the manufacturing and marketing of in-home pest control and personal care products under six brands – Sniper, Nopest, Purit, Carat, Safecut and Diva’s Secret. The Company is a member of the Saroafrica International Limited (“Saro Group” or “the Group”), a diversified corporation with business interests in crop protection, agro-processing, ethanol and personal care goods industries. SLC sells its products through extensive wholesale and retail networks that include hypermarkets, supermarkets and grocery stores. The Company also leverages Saro Group’s existing (crop protection) supply channels to reach farmers in remote locations. In line with its import substitution strategy, the Company commenced the local production of its insecticides and effectively discontinued the importation of finished aerosol products, following the commissioning of its aerosol factory in the second quarter of 2023.
