PACRA Upgrades Entity Ratings of Ismail Iqbal Securities (Pvt.) Limited.
The rating's positive impact emanates from i) Restoration in the equity base ii) more so, the documented resolution to take it to PKR 350mln over the near future with a planned injection of PKR 50mln, depending upon the quantum required and as backed by available resources. At the same time, the management is resolute to cease its proprietary book, which will also reduce the short term borrowings by the same margin. Direct reporting of head of departments to CEO augurs well for the Company. Further, the Company has established an audit committee for insightful monitoring. The assigned rating takes into account the company's robust brokerage performance and going forward strategies to intensify the business avenues. The company has lean organizational structure which allows the Company to be cost effective in market upturns without compromising the quality of services. The Company has a leveraged capital structure which is expected to witness improvement post equity injection and reduction in short term borrowings. Sizable liquid assets and support from sponsors provide buffer to the ratings.
The ratings are dependent on 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. Retention of key personnel, maintaining strong controls, commitment towards agreed parameters and sustainability of profits will remain critical. Injection of equity to help it reach PKR 350mln and cessation of proprietary book is essential.
Ismail Iqbal Securities (Pvt) Limited, a venture of Ismail Group, was established in August 06, 2004. The company operates through two branches, both in Karachi. Its main activities include
brokerage, investment advisory services, and securities research and underwriting. The company is owned by three individuals, wherein the majority shareholding (65%) lies with the CEO - Mr. Ahfaz Mustafa. The remaining stake is equally held by his siblings. The company's auditors are Baker Tilly Mehmood Idress Qamar. The company’s board comprises two experienced individuals including the CEO and his elder brother Mr. Azhar Iqbal (non-executive director). Executive decision making rests with CEO while an audit committee has been established for insightful monitoring.