The Pakistan Credit Rating Agency Limited
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Silwat Malik

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PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited.

Rating Type Entity
(28-Jun-19 )
(28-Dec-18 )
Action Maintain Maintain
Long Term AA AA
Short Term A1+ A1+
Outlook Stable Stable
Rating Watch - -

The ratings reflect Dawood Hercules Corporation Limited's (DH Corp) strong profile as an InvestCo holding significant investments through it's subsidiary Engro Corp. Divestment in Hub Power Company Limited at healthy gains has led to accumulation of sizeable liquid funds. The Company continues to hold these funds in money market instruments and has recently started investing in blue chip market securities indicating very strong liquidity. DH Corp is exploring new investments avenues to add to its portfolio including those in the technology sector. Meanwhile, DH Corp is expected to have a steady and increasing dividend stream from it's subsidiary, Engro Corp, which has announced a new investment of up to PKR 7.5bln in the telecom sector in April'19 through Enfrashare, a wholly owned subsidiary of Engro Infiniti. Further, Engro Energy Limited have also announced significant investments in the energy sector. The business acumen of the sponsoring family and strong governance practices provide support to the ratings.
The ratings require upholding strong overall risk profile and prudent investment policy by the Company. DH Corp enjoys sizeable liquid funds from divestment in HUBCO, giving it ample liquidity and cushion for debt servicing. At the same time, the management's commitment to maintain existing debt levels and coverages would be critical.

About the Entity
Dawood Hercules Corporation is a public listed company incorporated in 1968. The principal activity of the Company is to manage investments including its subsidiary and associated companies. Dawood Group (Dawood Family and associates) holds 34% stake in DH Corp through its’ corporate entities (20%) and individuals (14%). Other related foreign companies hold 54% shareholding in DH Corp, 9% is held by corporate and financial institutions whereas around 3% is held by the general public. The BoD is chaired by Mr Hussain Dawood, the patriarch of Dawood family. Mr. Inam-Ur-Rehman, is serving as CEO since Dec ’16.

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.