Press Release     
PACRA assigns Initial Broker Fiduciary Rating to Cedar Capital (Pvt.) Limited
Date: 25-Jun-21

Rating Details Rating Type Broker Fiduciary Rating
Current
25-Jun-21
Previous
--
Action Initial --
Rating BFR 3 --
Outlook Stable --
Rating Watch - --

Rating Rationale Factor Comment
Ownership CCPL is a family owned business and the stakes are being divided into two family members wherein the majority of shareholding lies with Mr. Umair Amanullah.
Governance BoD comprises two professional members having experience in the financial services, however, room for improvement exists in board size.
Management and Client Services CCPL's management team is well experienced. integration of technology into systems results in high efficiency and customer satisfaction.
Internal Controls and Regulatory Compilance The Company has established adequate risk management framework and has in house internal audit department to look after the internal controls.
Business Sustainability Ratings are constrained by the Company's significant dependence on equity brokerage operations, limited diversification of income streams.
Financial Sustainability The Company has a reasonable capitalization level with regulatory Net Capital Balance (NCB) standing at PKR 146mln at end-Dec'20. CCPL may have asset under custody of up to 25x of net worth.

Key Rating Drivers The assigned rating of Cedar Capital (Pvt.) Limited (CCPL) is reflective of adequate ownership structure, conservative governance framework, good regulatory compliance level and prudent client servicing. CCPL’s services mainly comprise equity brokerage where it has competitive institutional clientele. The ratings incorporate the 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 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
Legal Structure Private Limited
Year of Establishment 07-Feb-08
Type of License Trading and Self-clearing
Majority Ownership Individuals

Regulatory Disclosures Analyst Applicable Criteria Related Research
Afnan Iqbal
afnan.iqbal@pacra.com
+92-42-35869504
www.pacra.com

Methodology | Broker Fiduciary Rating | Jan-21

Sector Study | Brokerage & Securities | Jan-21

Disclaimer This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA. 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 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.