Lahore, September 29, 2021 (PPI-OT):Ismail Iqbal Securities (Pvt.) Limited (“IISPL” or the “Company”) is primarily engaged in the provision of equity brokerage service with a modest market share. The Company has also initiated the underwriting service recently to augment its revenue stream. The assigned ratings incorporate the Company’s reviving performance on the back of rising volumes and improved macro-economic indicators. The Company earned brokerage revenue of ~PKR 157mln during FY21 (FY20: PKR 65mln), consequently the losses turned into a profit of PKR 48mln in FY21 (FY20: PKR 37mln). The Company’s equity stood at ~PKR 326mln at end-Jun’21 (Jun’20: ~PKR 278mln) depicting an increase of ~17%.

However, the market share of the Company remained stagnant at ~2% during FY21. The Company has a low leveraged structure supported by sponsor’s loan which is well covered by liquid assets. At end-Jun’21, the proprietary book constituted ~56% of the Company’s equity (~PKR 326mln) to stand at ~PKR 182mln. This exposes the Company to a higher level of market risk and also results in conflict of interest. However, the management has implemented adequate measure to cope with this risk.

The Company has adequate capitalization levels with the net capital balance standing at ~PKR 153mln at end-Jun’21. The Company provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports and a dynamic reporting mechanism which is strengthening factor. The assigned ratings are reflective of the Company’s lean organizational structure where most of the heads directly reports to the CEO. Seasoned top management, sound risk management and compliance procedures provide support to the rating.

The ratings would remain dependent on meeting the benchmarks assigned by PACRA, i) cessation of proprietary book, ii) increase the equity to PKR 350mln over the near future depending upon the quantum required. The management’s ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry would be a positive factor. Retention of key personnel, maintaining strong controls, commitment towards agreed parameters and sustainability of profits will remain critical.

For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com