PACRA Maintains Instrument Ratings of Jahangir Siddiqui & Co. Ltd. | TFC X | Jul-17
|Rating Type||Debt Instrument|
The ratings reflect Jahangir Siddiqui & Co. Ltd.'s ('JSCL' or 'the Company') strong presence as a Holding Company in the financial sector with a portfolio of strategic investments mainly in banking (JS Bank, BankIslami Pakistan), insurance (EFU Life Assurance and EFU General Insurance), brokerage (JS Global Capital) and asset management segments (JS Investments). JS Bank is on its path to establish itself as a medium sized bank whereas BankIslami aims to expand its presence in the growing Islamic Banking sphere. The results have been so far mixed with macroeconomic challenges and stiff competition in the banking sector. JSCL holds significant stake in EFU General Insurance and EFU Life Insurance and plans to maintain it. After witnessing volatile markets for a while, JS Global and JS Investments are expected to have improved performance . The Company has recently increased its holding in Azgard Nine, while divested some stake in Pakistan International Bulk Terminal and other non-strategic investments. JSCL intends to diversify its portfolio and has made significant investments in LPG storage and infrastructure and OMC segments. The Company has made ~ PKR 2bln investments in these segments through its wholly owned subsidiary, Energy Infrastructure Holdings (Pvt.) Ltd. This is predominantly being funded by debt instruments. These initiatives are in gestation phase and will take time to mature. The recent upsurge in stock market, coupled with interest rate cuts of 625bps, are expected to improve the profitability of the Company. Moreover, EFU Life and EFU General remain stable dividend resources. The Company has a very strong capital structure with low leveraging and strong coverages. The debt instruments are covered by a mix of strategic and non-strategic investments. The Company has availed general relief provided by SBP for COVID-19, to defer part of its long-term debt repayment from bank. This will supplement cashflows along with lower interest payments due to reduced benchmark rate. JSCL does not plan to take further debt in the near term. The COVID outbreak has not impacted the Company's portfolio materially, exhibiting its resilience.
The ratings are dependent on the management's ability to execute its envisaged strategy of growth and expansion amidst prevailing tough environment. Timely materialization of these initiatives into sustainable ventures is critical. Strong performance of subsidiaries, stable dividends, and effective management of financial profile and liquidity remains important.
Jahangir Siddiqui & Co. Ltd. ('JSCL' or 'the Company'), successor to brokerage business started in early seventies by Mr. Jahangir Siddiqui, was established in 1991 and is listed on the Pakistan Stock Exchange (PSX). JSCL, JS Group’s flagship holding company, has portfolio of investments categorized into: a) subsidiaries, b) at fair value through OCI, and c) at fair value through profit or loss. Investments in the financial segment dominate the portfolio with significant concentration in the banking and insurance sectors. Other investments are in the energy, petroleum and infrastructure sectors. Chief Justice (R) Mahboob Ahmed is Chairman of the BoD, while, Mr. Suleman Lalani heads the Company as CEO.
TFC 10 - Privately placed instrument of PKR1,500mln issued during Jul-17 secured against marketable securities. Markup is paid semi-annually at a floating rate of 6MK + 1.40% p.a. Repayment started in Jan-19 and has an outstanding balance of PKR 750mln at July-20. The TFC would fully mature in Jul-22.