Ismail Iqbal Securities (Pvt.) Limited

CREDIT RATING REPORT | Nov-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
28-Nov-25 A- A2 Stable Maintain -
28-Nov-24 A- A2 Stable Maintain -
28-Nov-23 A- A2 Stable Initial -
About the Entity

Ismail Iqbal Securities (Pvt.) Limited (IISPL) is a private company incorporated under the Companies Ordinance, 1984 (superseded by the Companies Act, 2017) and holds a Trading Right Entitlement Certificate (TREC) of the Pakistan Stock Exchange Limited. IISPL operates through two branches in Karachi and is a family-owned business, with 65% held by CEO Mr. Ahfaz Mustafa, and 17.4% each by his sister, Ms. Ayesha Naseem, and brother, Mr. Azhar Iqbal; Mr. Muhammad Taufique holds a nominal stake. M/s Baker Tilly Mehmood Idrees Qamar, Chartered Accountants, serves as external auditor and is ranked in the 'A' category by the State Bank of Pakistan. With strong family ownership, regulatory compliance, and a diverse clientele, IISPL is well-positioned for sustainable growth in Pakistan’s capital markets.

Rating Rationale

Ismail Iqbal Securities (Pvt.) Limited (“IISPL” or “the Company”) is a well-established participant in Pakistan’s equity brokerage landscape, offering a comprehensive suite of services encompassing brokerage, investment advisory, portfolio management, research, and margin trading. The Company caters to a diversified clientele of institutional investors, corporates, and high-net-worth individuals. During 1QFY26, IISPL’s client base expanded by 10%, reflecting its growing market presence and sustained investor confidence. The Company’s ownership remains family-concentrated, providing continuity, strategic alignment, and long-term stability supported by a defined succession framework. The Board comprises two seasoned professionals, Chief Executive Officer Mr. Ahfaz Mustafa and Non-Executive Director Mr. Muhammad Taufique. IISPL operates with a streamlined organizational structure encompassing Finance, Compliance, IT, Research, Business Development, and Equity Sales. All departmental heads report directly to the CEO, ensuring cohesive decision-making and operational agility. During 1QFY26, Pakistan’s brokerage industry experienced heightened trading momentum as the KSE-100 Index surpassed the 130,000 mark. Leveraging this favorable environment, IISPL delivered a significant improvement in financial performance. Commission income rose to PKR 84.09 million from PKR 41.03 million in the same period last year, representing a 104% increase, while net profit after tax surged to PKR 48.79 million from PKR 7.55 million, translating into an EPS of PKR 1.41 compared to PKR 0.22. This performance was underpinned by strong brokerage activity, trading gains, and disciplined cost management. As of September 2025, the Company’s proprietary investment portfolio increased to PKR 44 million from PKR 20 million, representing 9% of equity. IISPL continues to demonstrate financial strength, with current assets of PKR 1,192.89 million against current liabilities of PKR 737.86 million, resulting in a sound current ratio of 1.62:1. The Company’s equity base rose to PKR 491.08 million, supported by profit retention, while liquid capital of PKR 1,225.69 million comfortably exceeds regulatory requirements. With an adequate capital base, sound governance practices, and a steadily expanding client franchise, Ismail Iqbal Securities remains well-positioned to sustain its growth trajectory and capitalize on emerging opportunities within Pakistan’s evolving capital markets.

Key Rating Drivers

The assigned rating reflects IISPL’s established market position in the equity brokerage industry, supported by a diversified client base and improving financial performance. The Company’s capitalization and liquidity indicators remain sound, while market risk is contained owing to limited proprietary exposure. The governance framework is considered adequate, with experienced management and defined control processes. Sustained profitability, maintenance of capitalization levels, and continued strengthening of operational and risk management practices will remain important for the rating going forward.

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

Ismail Iqbal Securities (Pvt.) Limited

rating analysis

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Profile
Background

Ismail Iqbal Securities (Private) Limited (“IISPL” or “the Company”) was incorporated in 2004 and commenced operations as a Corporate Member of the Karachi Stock Exchange. Following the integration of Pakistan’s stock exchanges, the Company now holds a Trading Right Entitlement Certificate (TREC) of the Pakistan Stock Exchange Limited (PSX). In addition, IISPL is registered with the Securities and Exchange Commission of Pakistan (SECP) as an Underwriter and Book Runner, enabling it to undertake a range of capital market activities within the regulatory framework.


Operations

Ismail Iqbal Securities (Private) Limited operates through two branches, both located in Karachi. The Company’s core business activity revolves around equity brokerage, which serves as its principal source of revenue. In addition to brokerage operations, IISPL is also engaged in underwriting and financial advisory services, and extends Margin Trading System (MTS)/Margin Financing System (MFS) facilities to its clients.


Ownership
Ownership Structure

Ismail Iqbal Securities (Private) Limited is a family-owned enterprise, with the majority shareholding (65%) held by Mr. Ahfaz Mustafa, who also serves in a key leadership role. The remaining equity is equally shared between his siblings, Ms. Ayesha Naseem and Mr. Azhar Iqbal, each holding 17.4% of the Company’s shares. Additionally, Mr. Muhammad Taufique holds a nominal single share.


Stability

The Company’s ownership structure, being concentrated within a single family, contributes to its overall stability and continuity. Furthermore, the presence of a defined succession plan supports long-term sustainability of management and governance practices.


Business Acumen

The Company’s principal sponsor possesses a strong academic foundation complemented by extensive, industry-specific experience in the capital markets. The sponsor’s strategic insight and decision-making capabilities are considered sound, reflecting a well-grounded understanding of the brokerage and investment landscape.


Financial Strength

The principal sponsor, Mr. Ahfaz Mustafa, possesses substantial personal net worth and is supported by a well-established and reputable family business group. This financial standing underpins the Company’s stability and reinforces its capacity to withstand business and market fluctuations.


Governance
Board Structure

The Company’s Board of Directors comprises two seasoned professionals — Mr. Ahfaz Mustafa, serving as the Chief Executive Officer, and Mr. Muhammad Taufique, a Non-Executive Director. While the current composition ensures effective operational and strategic oversight, the induction of an independent director would further augment the governance framework, promoting greater objectivity and strengthening overall board effectiveness.


Members’ Profile

Both directors are accomplished professionals with extensive and diverse experience in their respective domains. Their collective expertise equips the Board with the necessary strategic insight and operational oversight to ensure the Company’s business is managed effectively and in alignment with sound governance practices.


Board Effectiveness

To maintain a robust control environment and ensure adherence to applicable reporting and compliance standards, the Company has established an Audit Committee at the Board level. The Committee is chaired by the Non-Executive Director, thereby reinforcing independent oversight and governance integrity.


Transparency

Baker Tilly Mehmood Idrees Qamar serves as the Company’s external auditor and is recognized in the ‘A’ category on the State Bank of Pakistan’s list of approved auditors. For FY24, the auditor has issued an unqualified opinion on IISPL’s financial statements, reflecting a clear and reliable presentation of the Company’s financial position.


Management
Organizational Structure

The Company maintains a lean organizational structure, comprising the following key departments: Finance, Compliance, IT, Research, Business Development, and Equity Sales. All Heads of Department report directly to the Chief Executive Officer, ensuring clear reporting lines and operational accountability.The Company streamlined its structure to further enhance operational efficiency. The clear segregation of functions, including compliance and risk management, is expected to strengthen internal controls and support sustainable growth.


Management Team

Ismail Iqbal Securities (Pvt.) Limited is led by a seasoned management team with deep industry expertise. Mr. Ahfaz Mustafa, CEO & Nominee Director, has 17 years of experience, including 16 with IISPL, serving as CEO since 2009. Reporting to him, Mr. Junaid Haroon, CFO, brings 30 years of experience and joined his role in 2025. Mr. Nazim Abdul Muttalib, EVP & Head of Broking, and Mr. Jawwad Aboobakar, EVP & Head of Business Development, have 18 and 17 years of experience respectively, both in current roles since 2018. Mr. Muhammad Saad, Head of Research, has 7 years of experience, and Mr. Kashif Saleem, Company Secretary, has 13 years with the Company, 10 in his current role. The team collectively ensures strong strategic direction and sustainable growth.


Management Effectiveness

The front and back office software are integrated, resulting in the ability to generate real-time MIS reports for the management to make swift decisions in the dynamic environment.


Control Environment

The control environment is considered weak as the same person heads the Compliance and Finance functions. Adding an internal audit department and an independent Risk Management function is encouraged. The depth and scope of the Company's policies need improvement.


Business Risk
Industry Dynamics

During 1Q FY26, Pakistan’s brokerage industry benefited from strong market activity as the KSE-100 crossed 130,000 points and trading volumes remained elevated. Retail and institutional participation supported commission income, though foreign inflows weakened and cost pressures kept margins tight. Despite mixed sectoral performance, an active IPO pipeline and improving capital market sentiment offered new growth opportunities for brokers.


Relative Position

The Company primarily caters to HNWIs and has a sustained position in the market. IISPL was able to capitalize on the market surge and enhanced its market share.


Revenues

The Company demonstrated strong financial performance during Sep’25, with commission income rising to PKR 84.09 million compared to PKR 41.03 million in Sep’24, reflecting a notable 104% growth driven by enhanced brokerage activity and improved client engagement. Net profit after tax increased significantly to PKR 48.79 million, up from PKR 7.55 million in the same period last year, translating into an EPS of 1.41 versus 0.22. Both the topline and bottom line indicate sustainable momentum, underpinned by diversified income streams including brokerage revenues and trading gains, supported by favorable market conditions. Going forward, maintaining cost discipline and consistent trading performance will be critical to preserving this growth trajectory.


Cost Structure

IISPL's administrative expenses increased from ~PKR 24mln during 1QFY25, to ~PKR 51mln in 1QFY26. The surge in the administrative cost is due to increase in salaries and commission expense.


Sustainability

The brokerage income is expected to improve with the recent upward tick and better performance of the stock market. The Company also has plans to tap into foreign clientele once market conditions improve, which bodes well for IISPL's future. The management's ability to strengthen its supplementary income and maintain its niche will be important.


Financial Risk
Credit Risk

The main credit risk for a brokerage company results from providing clients with margin facilities to trade through leverage. IISPL does not allow clients the facility of leveraged trading apart from a selected few clients with whom they have long-term relationships, thus limiting their credit risk exposure.


Market Risk

As of September 2025, the Company’s short-term quoted securities portfolio grew fivefold to PKR 44million (Sep 2024: PKR 20 million), with proprietary listed investments representing 9% of equity. While offering growth potential, these holdings carry inherent market risks and conflict-of-interest concerns, including front-running. To address this, the Company implemented a structured investment policy with scrip/sector limits, ensuring SECP/PSX compliance. This framework strategically balances portfolio expansion with disciplined risk containment.


Liquidity Risk

As of September 2025, the Company maintained current assets of PKR 1,192.89 million against current liabilities of PKR 737.86 million, translating into a strong coverage ratio of 1.62:1. This healthy liquidity profile comfortably meets regulatory capital requirements and provides resilience against market volatility. The sizeable liquidity buffer not only supports timely settlement of obligations but also offers strategic agility—a key advantage in Pakistan’s dynamic brokerage landscape, where rapid fund mobilization and compliance readiness are critical.


Capital Structure

The Company’s equity base strengthened to PKR 491.08 million as of September 2025, reflecting continued profit retention and balance sheet expansion. Coupled with liquid capital of PKR 1,225.69 million, the capitalization structure remains well above SECP’s prescribed thresholds, reinforcing the firm’s capacity to withstand market fluctuations and meet settlement commitments with ease. This strong capital position not only safeguards client interests but also enhances the Company’s ability to capitalize on emerging opportunities in the capital markets.
 
 

Nov-25

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Ismail Iqbal Securities (Pvt.) Limited

financial summary

(PKR mln)

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Sep-25
3M		 Jun-25
12M		 Jun-24
12M		 Jun-23
12M
Management Audited Audited Audited
A. BALANCE SHEET
1. Finances 0 0 0 0
2. Investments 51 133 38 22
3. Other Earning Assets 0 0 168 76
4. Non-Earning Assets 1,183 718 390 224
5. Non-Performing Finances-net 0 0 0 0
Total Assets 1,235 851 596 322
6. Funding 681 376 - -
7. Other Liabilities (Non-Interest Bearing) 63 33 223 134
Total Liabilities 744 408 223 134
Equity 491 442 324 188
B. INCOME STATEMENT
1. Fee Based Income 88 268 137 64
2. Operating Expenses (51) (162) (92) (84)
3. Non Fee Based Income 20 53 121 (9)
Total Opearting Income/(Loss) 57 158 166 (29)
4. Financial Charges (3) (14) (14) (19)
Pre-Tax Profit 54 144 152 (48)
5. Taxes (5) (26) (15) (9)
Profit After Tax 49 118 136 (57)
C. RATIO ANALYSIS
1. Cost Structure
Financial Charges / Total Opearting Income/(Loss) 6.1% 8.6% 8.7% -66.7%
Return on Equity (ROE) 19.2% 64.1% 309.6% -40.6%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 39.8% 52.0% 54.4% 62.7%
Free Cash Flows from Operations (FCFO) / (Financial Charges + Current Maturity of Long Term Debt + Uncovered Short Term Borrowings) -1551.3% -897.6% 326.4% 236.4%
3. Liquidity
Liquid Assets / Total Assets (D+E+F) 75.7% 59.7% 56.0% 54.7%
Liquid Assets / Trade Related Liabilities 178.0% 156.0% 150.0% 160.6%
4. Credit & Market Risk
Accounts Receivable / Short-term Borrowings + Advances from Customers + Payables to Customers 57.0% 18.6% 26.0% 21.2%
Equity Instruments / Investments 100.0% 100.0% 100.0% 100.0%

Nov-25

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Ismail Iqbal Securities (Pvt.) Limited

rating scale

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Nov-25

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Ismail Iqbal Securities (Pvt.) 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))
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    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.

Nov-25

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