The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Entity Ratings of Ismail Iqbal Securities (Pvt.) Ltd

Rating Type Entity
(26-Aug-22 )
(29-Sep-21 )
Action Maintain Maintain
Long Term A- A-
Short Term A2 A2
Outlook Stable Stable
Rating Watch - -

Ismail Iqbal Securities (Pvt.) Limited (“IISPL” or the “Company”) primarily provides the services of equity brokerage with a modest market share. Due to the heightened political uncertainty prevailing during 2HFY22, the average traded volumes for FY22 stood at ~6,055mln depicting a decline of ~45% when compared with FY21 (~10,946mln). Following the market trend, the trading volumes of IISPL also took a hit, consequently, the commission on equity brokerage fell to ~PKR 93mln for FY22 (FY21: PKR ~160mln). Although, the Company managed to sustain its market share. The Company is engaged in the underwriting business; however, the quantum of business is low in this segment due to muted market situation for a long time. The top-line continues to feature significant reliance on brokerage commissions, and accordingly, there remains room for improvement in the revenue diversification domain. The bottom-line resulted in a loss of ~PKR 70mln for FY22 mainly due to losses suffered on prop-book trading. The equity stood at ~PKR 252mln at end-Jun’22 reflecting a decline of ~22% when compared with FY21. The assigned ratings are supported by a low leveraged capital structure. At end-Jun’22, the proprietary book constituted ~60% of the Company’s equity to stand at ~PKR 153mln. This exposes the Company to market risk and other associated risks. However, the management has implemented adequate measures to cope with this risk. The Company provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports, and a dynamic reporting mechanism which is a strengthening factor. The assigned ratings are reflective of the Company’s lean organizational structure where most of the heads directly report to the CEO. Seasoned top management, adequate risk management and compliance procedures provide support to the rating. The governance framework may be improved further by enhancing the board size with the inclusion of certified independent directors.
The management's ability to retain its market share and enhance the volumes and diversity of revenue to improve its competitive position in the brokerage industry remains crucial for the sustainability of the assigned ratings. Maintaining a strong financial profile and retention of key human resources remains important.

About the Entity
Ismail Iqbal Securities (Pvt.) Limited was established in August 06, 2004. The Company operates through two branches, both in Karachi. The Company is owned by three individuals, wherein the majority shareholding (65%) lies with the CEO - Mr. Ahfaz Mustafa. The Company’s board of directors comprises two experienced individuals including the CEO - Mr. Ahfaz Mustafa. The other director, Mr. Muhammad Taufique is a non-executive director and provides governance oversight. The Company has appointed M/s Baker Tilly Mehmood Idrees Qamar – Chartered Accountants as the external auditors.

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's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. 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.