The Pakistan Credit Rating Agency Limited
25-Jun-21
Analyst
Usama Zahid Sarhandi
usama.zahid@pacra.com
+92-42-35869504
www.pacra.com
Applicable Criteria
- Methodology | Corporate Ratings | Jun-20
- Methodology | Holding Company | Jun-20
- Methodology | Correlation Between Long-Term And Short-Term Rating Scale | Jun-20
- Criteria | Rating Modifier | Jun-20
Related Research
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PACRA Maintains Entity Ratings of Dawood Hercules Corporation Limited
| Rating Type | Entity | |
|
Current (25-Jun-21 ) |
Previous (26-Jun-20 ) |
|
| 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" or "the Company") very strong profile as an investment company with investments in diversified sectors mainly through Engro Corp. DH Corp has structured oversight process in place for monitoring and making new investments, an important requisite for any HoldCo. Liquid funds are held in money market instruments indicating strong liquidity. The Company has invested in blue chip market securities exposing it to market volatility. DH Corp is exploring new investment avenues to add to its portfolio. Last year, the Company has invested into technology led business through a newly formed wholly owned subsidiary, Empiric Al (Pvt.) Ltd., to provide competitive services in data science, cyber security and software engineering. In addition, the Company has received significant dividend from its subsidiary i.e., Engro Corporation Limited ('Engro'), as the underlying businesses managed healthy performance despite challenging environment post Covid-19 outbreak. Early repayment of debt instruments (Sukuk) has strengthen the Company's financial profile. Moreover, strong coverages and significant liquidity shows robust position. Very strong business acumen of the sponsoring family and strong governance practices provide support to the ratings.
The ratings depend on the management's ability to sustain low risk profile and follow prudent investment policy. At the same time, maintaining strong financial profile and liquidity remains important. Any significant increase in debt and/or prolonged downturn in invested companies will impact the ratings.
About
the Entity
Dawood Hercules Corporation Limited 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 ~33% stake in DH Corp through its’ corporate entities (~20%) and individuals (~13%). Around ~54% is held by foreign companies and remaining shares are held by financial institutions, general public and others. The Company's BoD is chaired by Mr. Hussain Dawood, the patriarch of Dawood family. Mr. Inam-Ur-Rehman is serving as the Company's CEO since Dec-16.