Dawood Equities Limited

CREDIT RATING REPORT | Sep-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
19-Sep-25 A- A2 Stable Maintain -
19-Sep-24 A- A2 Stable Maintain -
19-Sep-23 A- A2 Stable Maintain -
20-Sep-22 A- A2 Stable Maintain -
24-Sep-21 A- A2 Stable Initial -
About the Entity

Dawood Equities Limited was incorporated under the Companies Ordinance 1984, on May 3, 2006 as public limited company. The Company obtained listing on Pakistan stock Exchange in 2008. Mr. Ayaz Dawood, the primary sponsor, owns ~19% stakes in the Company, followed by Equity International (Pvt.) Limited (~16%), B.R.R. Investment (Pvt.) Ltd. (10%), and BFIs/IFIs/ Individuals (~9%). While 37% pertains to free float shares. The Company’s service offering includes economic and investment research, equity brokerage, and corporate finance & financial advisory services. The Company operates through seven branch offices, located in Karachi, Hyderabad, Lahore, Faisalabad and Sargodha, reporting to the Head Office in Karachi. Mr. Aziz Habib is the CEO of the Company having diverse experience brokerage business. The Company’s Board of Directors (BoD) comprises seven members, which include two independent directors, four non-executive directors and one executive director including 2 female directors in conformity with the Code of Corporate Governance (CCG).

Rating Rationale

Dawood Equities Limited ('DEL' or 'the Company') focuses primarily on equity brokerage services while underwriting and consultancy services are also provided. The clientele is concentrated to Retail and HNWI's, while the Company is aiming to enhance its footprint in Institutions/Corporates segment. The KSE-100 Index has witnessed a significant surge in investor interest, repeatedly touching historic highs and, for the first time, breaching the 125k-point mark in FY25. Despite this rally, the market’s P/E ratio remains relatively low, indicating room for further upside. A notable catalyst has been the reduction in the policy rate at the start of FY25, which prompted a shift in investor preference from fixed-income instruments to equities, fueling fresh buying momentum. This environment has created a favorable backdrop for the brokerage industry, with higher trading volumes, increased retail participation, and enhanced transaction-based revenues. While FY25 has been a strong year for the sector, sustaining investor confidence beyond FY25 will hinge on political stability, macroeconomic resilience, and the continuation of market-friendly policies. DEL’s performance was in line with the market's upward trend. The Company's brokerage income is the primary source of topline. The brokerage income stood at ~PKR 177mln as at Mar'25 while it was ~PKR 91mln in SPLY. During 9MFY25, earned a net profit of ~PKR48mln (SPLY: ~PKR 21mln). This surge in profitability was primarily driven by higher brokerage income and underwriting commissions. DEL has an adequate equity base of ~PKR 359mln at end-Mar'25. At end-Mar'25 the current assets of the Company stood at ~PKR 628mln against the current liabilities of ~PKR 308mln. The Company has an adequate liquidity profile. The Company has a prop book of ~PKR 82mln at the end-Mar'25 (SPLY: ~PKR 61mln). Ownership structure is considered stable, with the business acumen of the primary sponsor well noted. The ratings take comfort from an experienced and qualified management team. The client services are adequate, supported by a research analyst while the strength of the research department may be enhanced. The control framework is deemed satisfactory, primarily attributed to the presence of a risk management department. Moreover, DEL is expanding its branch network through franchising model.

Key Rating Drivers

Moving forward, income diversification, enhancement or sustainability in market share, and sustainability in revenue and profitability remains vital. Meanwhile, it is imperative to uphold robust internal controls, retention of key management personnel, and diligently monitor risks.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Dawood Equities Limited

rating analysis

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Profile
Background

The Company was incorporated in May 2006, as a public unlisted company, later on converted into public listed company in 2008. In January 2017, the Company obtained registration as an underwriter with SECP.


Operations

With its head office in Karachi, Dawood Equities operates through branches located in Karachi, Hyderabad, Lahore, Sargodha, and Faisalabad. Following its expansion strategy, the Company is in the process of establishing a new branch in Multan. The Company primarily offers the services of Equity Brokerage and also provides the services of Underwriting, Corporate Finance & Financial Advisory, and Research.


Ownership
Ownership Structure

The Company, being a listed entity, the ownership stakes are divested between different entities and individuals, out of which Mr. Ayaz Dawood, the primary sponsor, owns ~19% stakes in the Company, followed by Equity International (Pvt.) Limited (~16%), B.R.R. Investment (Pvt.) Ltd. (10%), and BFIs/IFIs/ Individuals (~9%). While 37% pertains to free float shares.


Stability

The Dawood Family Group is counted amongst the largest business groups in the country, and has a diversified investment portfolio.


Business Acumen

The business acumen is strengthened by the entrepreneurial and business skills of Mr. Ayaz Dawood. He is the CEO of BRR Guardian Modaraba and Chairman of Dawood Family Takaful Limited.


Financial Strength

The primary sponsor has sizeable financial strength due to his linkage with the Dawood Group, which has sizeable shareholding different companies operating in diverse sectors such as fertilizers, securities & commodities brokerage, corporate advisory, asset management, cement, power and real estate development sectors.


Governance
Board Structure

The Company’s Board of Directors (BoD) comprises seven members, which include two independent directors, four non-executive directors and one executive director including 2 female directors in conformity with the Code of Corporate Governance (CCG). The Board is chaired by Mr. Junaid Dada, an independent director.


Members’ Profile

All the directors are seasoned professionals and possess manifold experiences in the relevant fields. The Chairman, Mr. Junaid Dada holds diploma in business management from Santana Monica College, California. He is also the Chief Executive Officer (CEO) of Electricity Power Limited and United Sales Private Limited.


Board Effectiveness

Dawood Equities has two board committees, namely i) Audit Committee and ii) HR and remuneration committee. Audit committee meets on quarterly basis to review the financial statements and internal audit findings.


Transparency

The Company's external auditors are M Yousuf Adil & Company Chartered Accountants. The firm is QCR rated by ICAP and is in the A category of SBP's panel of auditors.


Management
Organizational Structure

The organizational structure is aligned with the business operations, and all necessary departments are present. Within this structure the branch managers, Settlement Department, Research, and Customer Support report to the Company’s Chief Operating Officer (COO). The COO reports to the CEO of the Company. CEO and CFO are accountable to the Board. The Internal Auditor reports to the Board Audit Committee which enhances the internal controls.


Management Team

Mr. Abdul Aziz Habib, the CEO of the Company, holds M.A. degree in Economics. He is a seasoned professional and has more than a decade experience of brokerage business. Mr. Salman Yaqoob is the CFO and Company Secretary of the Company. He is an Associate member of Institute of Certified Chartered Accountants & Institute of Corporate Secretaries of Pakistan. He has more than 13 years of financial and corporate experience especially in NBFC’s, Modaraba, Insurance and Brokerage business.


Management Effectiveness

The Company has an integrated front and back office system which provides the Company with System generated real-time based-MIS reports, adding more efficiency in decision making.


Control Environment

The Company has an outsourced internal auditor Reandra Haroon Zakaria & Company, which implements and monitors the policies and procedures of the Company, while the separation of the risk management and compliance function would have improved the control framework further.


Business Risk
Industry Dynamics

The KSE-100 Index has witnessed a significant surge in investor interest, repeatedly touching historic highs and, for the first time, breaching the 125k-point mark in FY25. Despite this rally, the market’s P/E ratio remains relatively low, indicating room for further upside. A notable catalyst has been the reduction in the policy rate at the start of FY25, which prompted a shift in investor preference from fixed-income instruments to equities, fueling fresh buying momentum. This environment has created a favorable backdrop for the brokerage industry, with higher trading volumes, increased retail participation, and enhanced transaction-based revenues. While FY25 has been a strong year for the sector, sustaining investor confidence beyond FY25 will hinge on political stability, macroeconomic resilience, and the continuation of market-friendly policies.


Relative Position

The Company primarily caters to HNWIs and Retail clientele, while corporate clientele are also present. Dawood Equities Limited has an average market share of ~1.1% during 9MFY25 on traded volume basis.


Revenues

The Company's brokerage income is the primary source of topline. The brokerage income stood at ~PKR 177mln as at Mar'25 while it was ~PKR 91mln in SPLY. During 9MFY25, earned a net profit of ~PKR48mln (SPLY: ~PKR 21mln).


Cost Structure

The Company's administrative expenses ~PKR 46mln as at Mar'25 (9MFY25). The Company reported a net profit after tax of ~PKR 48mln at the end-Mar'25.


Sustainability

The Company is planning to further enhance its geographical presence, as evidenced by the operational branches in Faisalabad and Sargodha, while a new branch is currently under development in Multan. Furthermore, the plan is to increase their revenue diversification further by boosting their underwriting income.


Financial Risk
Credit Risk

Dawood Equities has due diligence procedures in addition to its KYC, for the assessment of its client’s creditworthiness. The Board has approved per party and per script limits, which are strictly adhered to by the management which minimizes the credit risk.


Market Risk

Dawood Equities established a formal Investment Policy document (IPS) for its proprietary book approved by the BoD - addressing exposure in different avenues. At end-Mar'25, the proprietary book of the Company stood at ~PKR 82mln, constituting ~22% of equity.


Liquidity Risk

At end-Mar'25 the current assets of the Company stood at ~PKR 628mln against the current liabilities of ~PKR 308mln. The Company has an adequate liquidity profile.


Capital Structure

The Company has a low-leveraged capital structure, with short-term borrowing standing at ~PKR 42mln at end-Mar'25. The equity of the Company stood at ~PKR 359mln at end-Mar'25.
 
 

Sep-25

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Dawood Equities Limited

financial summary

(PKR mln)

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Mar-25
9M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
Management Audited Audited Audited
A. BALANCE SHEET
1. Finances 17 12 12 7
2. Investments 87 80 57 90
3. Other Earning Assets 31 2 8 39
4. Non-Earning Assets 534 379 281 238
5. Non-Performing Finances-net 0 0 0 0
Total Assets 669 474 358 373
6. Funding 295 179 92 82
7. Other Liabilities (Non-Interest Bearing) 14 0 12 11
Total Liabilities 309 180 104 93
Equity 360 294 254 280
B. INCOME STATEMENT
1. Fee Based Income 115 133 44 116
2. Operating Expenses (48) (105) (51) (107)
3. Non Fee Based Income 11 31 1 9
Total Opearting Income/(Loss) 78 58 (6) 18
4. Financial Charges (6) (12) (8) (2)
Pre-Tax Profit 73 46 (14) 16
5. Taxes (24) (12) (6) (6)
Profit After Tax 49 34 (20) 10
C. RATIO ANALYSIS
1. Cost Structure
Financial Charges / Total Opearting Income/(Loss) 7.4% 21.3% -124.2% 13.6%
Return on Equity (ROE) 55.6% 28.2% -15.2% 7.0%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 53.8% 62.1% 70.9% 75.1%
Free Cash Flows from Operations (FCFO) / (Financial Charges + Current Maturity of Long Term Debt + Uncovered Short Term Borrowings) -1073.6% -81.3% 33.8% 364.2%
3. Liquidity
Liquid Assets / Total Assets (D+E+F) 51.0% 55.7% 60.4% 62.4%
Liquid Assets / Trade Related Liabilities 135.4% 197.8% 807.9% 839.1%
4. Credit & Market Risk
Accounts Receivable / Short-term Borrowings + Advances from Customers + Payables to Customers 91.6% 115.0% 197.6% 218.8%
Equity Instruments / Investments 95.2% 94.5% 91.6% 94.3%

Sep-25

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Dawood Equities Limited

rating scale

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Sep-25

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Dawood Equities Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Sep-25

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