PACRA maintains the Broker Management Rating of Ismail Iqbal Securities (Pvt.) Limited

The ratings are reflective of company's reviving performance on the back of hefty traded volumes and improved macro economic factors. The company has a modest market share in the brokerage industry. The company’s services mainly comprise equity brokerage wherein the Company has competitive institutional clientele. The ratings incorporate the company's lack of diversification in revenue streams. The assigned rating takes into account the company's high exposure to market risk due to its proprietary book, which may indicate conflict of interest but the management has implemented adequate measures to cope with this risk. The company has lean organizational structure with most of the heads reporting directly to CEO. Seasoned top management, sound risk management and compliance procedures provides support to the rating. Furthermore, the company has adequate capitalization levels with the net capital balance of ~PKR 153mln at end Jun-20. The company has a moderate leveraged structure. The debt is well covered by liquid assets. However, the equity of the company has eroded significantly due to continuous losses.
The ratings are dependent upon the persistent adherence of Board of Directors (BoD) in compliance with agreed parameters, management's efforts to improve market share in volume and value. Meanwhile, strong BoD framework, insightful monitoring of market risk and liquidity management remains imperative. Retention of key management personnel and continuous improvement in customer servicing tools will bode well for the company. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.

About the Entity
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 Mr. Azhar Iqbal provides governance oversight.