Rating Details	Rating Type	BFR
	Dissemination Date	Current (10-May-24 )	Previous (12-May-23)
	Action	Maintain	Upgrade
	Rating	BFR 2	BFR 2
	Outlook	Stable	Stable
	Rating Watch	-	-

Rating Rationale	Factor	Comment
	Ownership	Oxford Frontier Capital, a UK-based Fintech-focused VC/PE firm, holds a significant 60% ownership stake, providing KTrade with access to capital, expertise, and a global network.
	Governance	The Company boasts a good governance structure with five members, including three independent directors and two executive directors.
	Management and Client Services	KTrade has a lean organizational structure with an experienced and qualified management team to manage operations. Client services are considered adequate with online trading and research reports present.
	Internal Controls and Regulatory Compilance	KTrade has a strong internal control environment, backed by outsourced internal audit services, and the active involvement of audit and risk management committees. A dedicated compliance head ensures effective compliance reporting.
	Business Sustainability	KTrade's topline is concentrated to equity brokerage; however, there is diversity present in the form of advisory, MFS & MTS. During 1HFY24, the company earned ~PKR 92mln ( SPLY: ~PKR 42mln) as operating revenue, with a profit/(Loss) after tax of ~PKR 58mln (SPLY: ~PKR (49)mln).
	Financial Sustainability	KTrade mitigates market risk by refraining from engaging in proprietary book investments. KTrade has managed to retain its market share despite declining market volumes and economic uncertainty. KTrade had an adequate equity base of ~PKR 449mln at end-Dec'23.

Key Rating Drivers

The brokerage industry exhibited a notable performance since October 2023 based on improved macroeconomic indicators resulting in renewed investor interest, reaching historic high levels during April 2024. KTrade is planning to take advantage of the market upticks by further focusing on retail clientele and enhancing its market share. The management has also improved its technological structure for the swift onboarding of retail clientele. Moving forward, the materialization of planned revenue and geographical diversification is important for the rating. Maintenance and improvement of market share and growth in revenue and profitability remain vital. Meanwhile, it is imperative to uphold robust internal controls, retention of key management personnel and diligently monitor risks.

About the Entity
	Legal Structure	Public Limited
	Year of Establishment	25-Apr-13
	Type of License	Trading and Self-clearing
	Majority Ownership	Oxford Frontier Capital Limited | ~60%

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Hassaan Ahmad Hassaan.Ahmad@pacra.com +92-42-35869504 www.pacra.com	Assessment Framework | Broker Fiduciary Rating | Jan-24	Sector Study | Brokerage & Securities | Jan-24

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