PACRA maintains Broker Entity Ratings of KTrade Securities Limited

KTrade Securities Limited ('KTrade' or the 'Company') is an emerging brokerage house rapidly expanding its footprint in the equity brokerage space. KTrade focuses primarily on equity brokerage while diversification is present in the form of corporate finance and money market operations. Through a focus on technological platforms aimed at attracting new retail investors, the Company has steadily increased its market presence and ranks near the top amongst brokerage houses that have successfully added new UINs. The ratings take into account the business acumen of the primary sponsor - Oxford Frontier Capital, a UK based Fintech focused VC/PE. The primary sponsor provides access to capital, expertise and global networking for KTrade. The governance structure is considered sound with the presence of independent directors and board committees well noted. The rating takes comfort from a well-defined organizational structure and experienced management team. The integration of a customized CRM module has led to efficient reporting and increased customer satisfaction with enhanced focus on online presence. Internal audit, compliance, and risk management functions are present for an efficient control environment. Addition of a dedicated risk management head has strengthened the control framework further. Due to limited investor interest, political turmoil, and high interest rates, the market performed poorly during FY23, with a volumetric decline of ~33% when compared with FY22. Consequently, KTrade's topline also fell by ~33% to ~PKR 87mln during FY23 (SPLY: ~PKR 129mln). Despite the rising inflation and subdued market interest in FY23, the Company managed to reduce its administrative expenses by ~17% and provided support to the topline through ~PKR 54mln of other income (SPLY: ~PKR 30mln). However, ~PKR 48mln incurred on account of capital loss on proprietary book meant that the Company suffered from a loss after tax of ~PKR 135mln during FY23 (SPLY: ~PKR 116mln). The ratings take comfort from a zero-leveraged capital structure. The equity base of the Company stood at ~PKR 391mln at end-Jun'23.
Going forward, the materialization of planned business strategies to provide boost to the topline is critical to the ratings. Improvement in market share and sustaining profitability from core operations remain crucial. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel and diligent monitoring of risks is important

About the Entity
KTRADE Securities Limited incorporated in 2013 as TREC Holder of the Pakistan Stock Exchange. Recently, the Company has converted into public unlisted Company and renamed to KTRADE Securities Limited. Oxford Frontier Capital Limited is the major shareholder of the Company holding ~60% of the ownership. The Company’s service offering includes Economic and Investment Research, Equity Brokerage, and Advisory service. With its head office based in Karachi, the Company operates through four offices, one in Multan, one in Lahore and two in Karachi. The board of directors (BoD) of the Company comprises five experienced professionals, including the CEO and three independent directors.