The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA assigns Initial Broker Management Rating to Cedar Capital (Pvt.) Limited

Rating Type Broker Management
Action Initial
Long Term BMR3
Short Term -
Outlook Stable
Rating Watch -

The assigned rating of Cedar Capital (Pvt.) Limited ("CCPL" or the "Company") incorporates adequate ownership structure, satisfactory regulatory framework, sound internal controls and strong business acumen of sponsor. CCPL has a well-defined organizational hierarchy where the responsibilities and reporting lines are logically structured. The assigned rating takes into account a sound IT infrastructure supported by clearly defined IT, disaster recovery and back-up policy. CCPL provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports and a dynamic reporting mechanism. CCPL primarily provides the services of equity brokerage, wherein CCPL has competitive institutional clientele; however, limitation in revenue diversification exists. Further, governance framework is adequate as room for improvement exits on independent insight. The ratings also incorporate CCPL's low leveraged capital structure supported by sponsor’s loan. CCPL has closed its proprietary book to reduce the volatility in profits, hence less exposed to market risk. The Company has a reasonable capitalization level with regulatory Net Capital Balance (NCB) standing at PKR 248mln at end-Mar'21. CCPL may have asset under custody of up to 25x of net worth.
The ratings would remain dependent on the management’s ability to strengthen revenue base by augmenting consultancy and advisory services. Retaining market share and sustaining profitability from core operations remain critical. Meanwhile, upholding strong internal controls and diligent monitoring of risks is important.

About the Entity
Cedar Capital (Pvt.) Limited is TREC holder member of stock exchange and was incorporated under the Companies Ordinance 1984 on Feb 7, 2008 as private limited company. CCPL is a licensed TRE certificate holder of Pakistan Stock Exchange and has opted for trading and self clearing category. CCPL was formed in 2008 after the acquisition of M/S Siraj ud din Qasim and commenced brokerage operations in 2011. CCPL is primarily engaged in the provision of equity brokerage services. CCPL’s equity brokerage mainly comprises of services including dealing in securities on Ready and Future Counters. The majority ownership of CCPL lies with the individuals directly. Mr. Umair Amanullah, the CEO, holds ~74% of the ownership. Mr. Umair Amanullah is associated with the capital markets of Pakistan for the last 18 years.

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.