Press Release
Date: 24-Jun-22
PACRA Maintains Broker Fiduciary Rating of Cedar Capital (Pvt.) Limited

Rating Details Rating Type BFR
Dissemination Date Current (24-Jun-22 ) Previous (25-Jun-21)
Action Maintain Initial
Rating BFR 3 BFR 3
Outlook Stable Stable
Rating Watch - -

Rating Rationale Factor Comment
Ownership The ownership has been divided into two family members wherein the majority of shareholding lies with Mr. Umair Amanullah.
Governance BoD comprises two professional members having experience in the financial services, however, room for improvement exists in board size.
Management and Client Services CCPL's management team is well experienced. Integration of technology into systems results in high efficiency and customer satisfaction.
Internal Controls and Regulatory Compliance The Company has established adequate risk management framework and has in house internal audit department to look after the internal controls.
Business Sustainability Ratings are constrained by the Company's significant dependence on equity brokerage operations, limited diversification of income streams.
Financial Sustainability The Company has a reasonable capitalization level with the LCB and NCB standing at ~PKR 270mln and ~PKR 274mln respectively, at end-Dec'21.

Key Rating Drivers The assigned rating of Cedar Capital (Pvt.) Limited (CCPL) is reflective of an adequate ownership structure, conservative governance framework, and sound regulatory compliance and client servicing. The rating accounts for an experienced and qualified management team following a lean organizational structure with clearly defined responsibilities and reporting structure. The clients have been provided with the necessary services including online trading, complaint management, a user-friendly website, and dedicated traders facility. The client services may be improved further with the introduction of a separate research department. The Company has diversified its geographical outreach with the opening of Lahore branch. CCPL has a sound internal control framework supported by an in-house internal audit department and a compliance function augmented by properly defined policies. The rating incorporates a strong business acumen of the sponsor; however, the governance structure has room for improvement in terms of enhancement in board size and the presence of an independent insight. During the 9MFY22, the topline has reflected a significant growth of ~PKR 74mln when compared with the numbers of 9MFY21. However, a significant portion of the revenue is being contributed by a single client resulting in revenue concentration. Diversification in product offering and client base would improve financial sustainability and is an important factor from the rating perspective. An adequate equity base, low leveraged capital structure, and the containment of market risk provide comfort.

About the Entity
Legal Structure Private Limited
Year of Establishment 07-Feb-08
Type of License Trading and Self-clearing
Majority Ownership Mr. Umair Amanullah | ~74%

Regulatory Disclosures Analyst Applicable Criteria Related Research
Afnan Iqbal

Methodology | Broker Fiduciary Rating | Jan-22

Sector Study | Brokerage & Securities | Jan-22

Disclaimer This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA. The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.