Rating Details	Rating Type	BFR
	Dissemination Date	Current (14-Jun-23 )	Previous (14-Jun-22)
	Action	Maintain	Initial
	Rating	BFR 3	BFR 3
	Outlook	Stable	Stable
	Rating Watch	-	-

Rating Rationale	Factor	Comment
	Ownership	The majority of stakes are owned by Mr. Adam Haji Muhammad who is also the primary sponsor. The assigned rating takes comfort from the vast experience of Mr. Adam pertaining to equity markets.
	Governance	The board is comprised of three members all representing the shareholder family members. Room for improvement exists in the board structure.
	Management and Client Services	AHM has a seasoned management team with a lean organizational structure. AHM has provided its clients with the facility of online trading featuring universal access to their accounts.
	Internal Controls and Regulatory Compliance	AHM has adequately implemented the control framework which commensurate with the scale of business operations. However, AHM may consider improvement in the compliance and establishing a separate risk
	Business Sustainability	The primary income stems from equity brokerage which reflected considerable improvement during FY21; however, adverse market conditions have halted the growth momentum during FY22 and 1HFY23.
	Financial Sustainability	AHM has adequate capitalization level with the equity standing at ~PKR 130mln at end-Dec’22. AHM is managing a prop-book which exposes it to market risk.

Key Rating Drivers

AHM Securities (Pvt.) Limited (“AHM” or “the Company”) mainly provides the services of equity brokerage which is also the primary source of revenue for the Company. The rating incorporates the sound business understanding of the primary sponsor having a sound financial profile. The presence of an independent insight may strengthen the governance framework. AHM has an experienced management team capable to serve clients in a good manner. Forming an independent compliance function and separate risk management may align the internal control framework with the best practices. AHM provides the facility of an online trading platform; however, the formation of a research department may further enhance the level of client services. AHM reflected a significant improvement in the topline during FY21; however, FY22 remained a lackluster year for the market. AHM managed to curtail the decline in topline at ~15% as compared to a decline of ~36% in the market volumes during 1HFY23 while markup on deposits supported the bottom line to remain in profit. The uncertainty prevailing in the equity market amid ongoing political tension may have an adverse impact on the top line in the future. The rating remains dependent on AHM’s ability to sustain and improve its financial profile.

About the Entity
	Legal Structure	Private Limited
	Year of Establishment	06-Jan-05
	Type of License	Trading and Self-clearing
	Majority Ownership	Mr. Adam Haji Muhammad (~99%)

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Afnan Iqbal afnan.iqbal@pacra.com +92-42-35869504 www.pacra.com	Methodology | Broker Fiduciary Rating | Jan-23	Sector Study | Brokerage & Securities | Jan-23

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