Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
30-Sep-26 A- A2 Stable Maintain -
30-Sep-25 A- A2 Stable Maintain -
25-Oct-24 A- A2 Stable Maintain -
27-Oct-23 A- A2 Stable Maintain -
31-Oct-22 A- A2 Stable Maintain -
About the Entity

Orient Rental Modaraba ('the Modaraba') became operational on 24-Nov-17 as a multi-purpose perpetual Modaraba. The Modaraba mainly operates in two segments: Ijarah Rentals (provides equipment rental solutions), along with Operations & Maintenance agreements. The Modaraba is (~25%) owned by its Directors, followed by the associated companies (~16.6%). Financial institutions hold ~8.85% stake; while the general public holds ~ 46.92% stake in the Modaraba. The Modaraba's Board is chaired by Mr. Chaudhry Jawaid Iqbal; while, Mr. Teizoon Kisat heads as the CEO. They are assisted by a team of seasoned professionals.

Rating Rationale

Orient Rental Modaraba ("the Modaraba") is supported by an adequate and well-managed asset base, sound asset quality, and a sustained trend in profitability. The Modaraba's core business comprises the rental and operations & maintenance (O&M) of gensets and other machinery. It benefits from its association with Orient Energy Systems (Pvt.) Ltd. through its management company, Eman Management (Pvt.) Ltd., leveraging complementary business activities and industry expertise. The presence of experienced management and a robust internal control framework further supports the Modaraba's operations. A significant portion of the Modaraba's revenue is derived from Ijarah Rentals, supplemented by O&M agreements. Gensets are primarily deployed across the textile and food & beverage sectors, while excavators are utilized at construction sites. O&M services cater mainly to the healthcare, food & beverage, and textile sectors. The broader NBFC sector remains relatively stable, with total assets reaching ~PKR 6,844bn as of 6MFY26, compared with ~PKR 6,204bn in 6MFY25. Mutual funds and plans continue to dominate the sector, representing ~66.3% of total assets, while discretionary/non-discretionary portfolios account for ~14.5%. Against this backdrop, the Modaraba's focus on asset-backed rentals and Shariah-compliant financing provides avenues to diversify its business mix. During 9MFY26, the Modaraba's topline remained broadly stable at ~PKR 1,843mln, compared with PKR 1,838mln in 9MFY25. Going forward, the Modaraba plans to build its business volumes through a combination of its core financing and rental businesses, while exploring opportunities in emerging segments. The Modaraba intends to increase its focus on Diminishing Musharakah financing and identify new rental opportunities, including solar panel maintenance and battery energy storage systems. In parallel, the Modaraba is placing greater emphasis on its Facilities Management segment, covering both hard and soft services, which has continued to witness growth. The Modaraba is also exploring opportunities in the electric mobility space, despite the challenges associated with the segment. In this regard, it is currently developing an electric bike offering, which is intended to be subsequently provided to corporate customers. These initiatives are expected to support diversification of the Modaraba’s revenue streams and provide avenues for business growth. Continued attention to cost optimization will remain important to support profitability. From a financial risk perspective, the Modaraba maintains an adequate profile, underpinned by manageable leverage. Sustaining healthy capacity utilization, diversifying revenue streams, and maintaining a streamlined governance framework will remain important for the Modaraba's ratings.

Key Rating Drivers

The ratings depend on the Modaraba's relative market position and its ability to sustain asset quality and profitability. Maintaining a sound financial profile is crucial, as any significant change to its risk profile could negatively affect the ratings.

Profile
Structure

Orient Rental Modaraba ('the Modaraba') is a Non-Banking Financial Institution formed under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. The Modaraba was formally listed on 17-Nov-17 on the Pakistan Stock Exchange (PSX).


Background

The Modaraba is associated with Orient Energy Systems (Pvt.) Ltd. ('Orient Energy') that provides engineering, power generation, and industrial solutions. The Modaraba is registered under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980. The Modaraba structurally operates through Eman Management Company (Pvt.) Ltd.('the Management Company') and was formed by spinning off two of the core divisions, generator rental and operation & maintenance of Orient Energy.


Operations

Orient Rental Modaraba is a perpetual Modaraba primarily engaged in the rental and Ijarah financing of power generation and heavy equipment, along with associated operations and maintenance services. The Modaraba currently maintains a rental asset portfolio of 156 units, comprising 149 gensets and 7 excavators. The genset fleet has an aggregate installed generation capacity of approximately 119.05 MW, comprising 67.31 MW of diesel-based and 51.74 MW of gas-based capacity. Of the total genset fleet, 127 units are deployed under customer contracts, including 33 prime and 94 standby units, while the remaining 22 units are idle and available for hire. The Modaraba also maintains a fleet of seven excavators, of which two are deployed and five are available for hire. Under its Ijarah operations, the Modaraba acquires and provides equipment to customers against agreed periodic rentals, while its operations and maintenance activities ensure the upkeep, reliability and operational availability of equipment deployed at customer sites. The Modaraba's operations therefore generate income primarily through rental/Ijarah receipts, supplemented by related equipment servicing and maintenance activities.


Ownership
Ownership Structure

The Modaraba is (~25%) owned by its Directors, followed by the associated companies (~16.6%). Financial institutions hold ~8.9% stake, while, general public holds ~ 46.92% stake in the Modaraba.


Stability

The ownership profile of the Modaraba remains stable, supported by its association with the Orient Group, a well-established business group with over six decades of presence in Pakistan. The Group maintains a diversified portfolio with a primary focus on power generation and industrial solutions and services, including the distribution of internationally recognized brands. The Group's established market presence, diversified business interests and longstanding involvement in the power and industrial sectors provide support to the Modaraba's ownership profile.


Business Acumen

Orient Energy, a key subsidiary of the Orient Group, focuses on engineering solutions for the power and energy sectors. Orient Energy has a notable history of providing power generation equipment and related services in Pakistan.


Financial Strength

Orient Energy holds a sound financial footing to financially support the Modaraba, if needs be.


Governance
Board Structure

The overall control lies with the six-member Board of Directors (BoD), comprising two Independent Directors, three Non Executive, and one Executive Director. The BoD holds substantial independence and female presence that supports the policy formation and  decision-making process.


Members’ Profile

The Board of Directors (BoD) is chaired by Mr. Ch. Jawaid Iqbal, who brings over four decades of experience in the engineering and power sectors. He established Orient Energy Systems (OES) in 1996 and has been associated with the Modaraba since its inception. Ms. Saba Ahmed Agrawalla, an Independent Director, has over 19 years of experience in Pakistan's leasing industry, while Mr. Nasim Ahmed brings more than 25 years of experience across power generation, energy solutions, engineering, project management, contract management and related sectors. Overall, the BoD comprises members with relevant sector experience and diverse professional backgrounds, supporting effective oversight and informed deliberations.


Board Effectiveness

During the year, the BoD met on quarterly basis to discuss pertinent agenda. Adequate information pack was circulated before each BoD meeting. To ensure effective and efficient operations, the BoD is supported by three key committees: Audit, Human Resources and Remuneration, and Risk Management. Audit and Human Resource committees are chaired by  Independent Directors, and the Risk Management Committee is chaired by Non Executive Director, as per the norm of the Code of Corporate Governance. All meetings have adequate presence of the Directors with adequately documentation of minutes.


Financial Transparency

The Modaraba's external auditors, M/S. Yousuf Adil Chartered Accountants, has issued an unqualified report pertaining to the financial statements as of FY25. The firm is QCR rated and is on the SBP's panel of auditors in the category "A".



Management
Organizational Structure

The Modaraba is managed through HR, IT, Finance, Administration, Internal Audit, Procurement, Operations & Maintenance, Logistics, Power Systems, and Sales functions. Each function is managed by its respective Head, reporting directly to the CEO, who then reports to the BoD. However, the Head of Internal Audit and HR reports administratively to the CEO and functionally to the respective BoD committee.


Management Team

The Modaraba is led by Mr. Teizoon Kisat as the CEO. He brings in over four decades of experience from the Modaraba industry and has been associated with the Modaraba since Sept-20. Ms. Effat Assad has been serving as the CFO since July 2021 and brings over three decades of experience. The Modaraba is supported by a highly experienced management team, which holds a long-standing association with the Company.


Effectiveness

The Modaraba's operations are overseen by individual functional departments, each reporting directly to the CEO. The establishment of management committees has resulted in enhanced monitoring and ensures effective execution of operations.


MIS

The Modaraba has an in-house ERP-based management information system, which has been implemented for efficient and timely reporting. The system provides optimal solutions for efficient monitoring of customer proposals, approval processes, and execution of the facility as well.


Risk Management framework

The Modaraba maintains a prudent approach to risk management, with risk exposures closely monitored and managed within established limits and policies set by the Modaraba Management Company. This framework supports timely identification and mitigation of key risks while ensuring that business activities remain aligned with the Modaraba’s overall risk appetite.


Business Risk
Industry Dynamics

Total assets of NBFCs grew by ~41.6% YoY to PKR ~5,635bn in FY25 (FY24: PKR ~3,978bn), primarily led by ~45.2% growth in mutual funds and plans, supported by the strong performance of the PSX, which delivered a ~60.5% return during the year, as well as the relatively favorable tax treatment of income funds compared with bank deposits. The sector's asset base continued to expand, reaching PKR ~6,844bn as of 6MFY26 (6MFY25: PKR ~6,204bn). Going forward, while geopolitical uncertainty may weigh on investor sentiment, demand for professionally managed savings and investment products is expected to remain supportive. However, changes in the interest-rate environment could influence asset allocation, with higher deposit yields potentially encouraging a shift toward interest-bearing instruments. Mutual funds and plans remained the dominant segment, accounting for ~66.3% of total NBFC assets in 6MFY26, followed by discretionary/non-discretionary portfolios at ~14.5% and Non-Banking Microfinance Companies at ~6.0%.


Relative Position

The Modaraba holds a market share of ~3% based on the total assets in the industry, and ~7% on the basis of the total equity.


Revenues

The Modaraba derives its revenue primarily from two segments: Ijarah Rentals and Operations & Maintenance (O&M). During 9MFY26, revenue from Ijarah Rentals declined by ~10% to PKR 950mln (9MFY25: PKR 1,056mln), reflecting lower rental income during the period. In contrast, revenue from the O&M segment grew by ~14% to PKR 889mln (9MFY25: PKR 779mln), supported by improved business activity. Despite the contraction in the core Ijarah segment, the growth in O&M revenue largely offset the decline, resulting in a marginal increase in total income to PKR 1,805mln during 9MFY26 (9MFY25: PKR 1,773mln), up by ~1.8% YoY. The changing revenue mix highlights the increasing importance of non-Ijarah income. Nevertheless, long-term earnings growth will continue to rely on the expansion and effective utilization of the Ijarah portfolio.


Performance

During 9MFY26, the Company's gross profit declined by ~24% YoY to PKR 348mln (9MFY25: PKR 455mln), reflecting the impact of lower rental income as Ijarah rental revenue contracted by ~11% during the period. Consequently, gross margins remained under pressure despite stable operating efficiency. On the other hand, finance costs declined significantly by ~33% YoY to PKR 61mln (9MFY25: PKR 91mln), primarily owing to the reduction in benchmark policy rates, which eased the Company's borrowing costs and partially mitigated the decline in operating profitability.


Sustainability

The Modaraba has previously amended the business objectives clause of its prospectus and continues to pursue a growth strategy focused on expanding business volumes and diversifying revenue streams. In this regard, the Modaraba is exploring new business avenues, including solar panel maintenance and battery energy storage systems, aimed at broadening its service offering and supporting profitability. In parallel, the Modaraba is seeking to expand its Diminishing Musharakah portfolio, thereby further diversifying its operations and strengthening its earnings base.


Financial Risk
Credit Risk

The Modaraba is carrying  risks in terms of default in rental payments by the customer and other risks such as non-possession of the owned asset, misuse by the customer, accidents, theft, and breakdown. The Modaraba manages its credit risk through a comprehensive credit policy and deployment of assets at different industrial sector throughout the Country.


Market Risk

The Modaraba focuses primarily on its core Ijarah and related business activities and has no exposure to equity or debt investments. Its investments are largely concentrated in assets deployed for the Ijarah business, limiting exposure to fluctuations in financial market prices. Consequently, the Modaraba’s exposure to market risk remains negligible.


Liquidity and Funding

The Company's liquidity profile improved during 9MFY26, with the Liquid Assets-to-Funding ratio increasing to ~36% (9MFY25: ~16.6%; FY25: ~30.5%), reflecting a stronger liquidity buffer. The Modaraba primarily finances its operations through Diminishing Musharakah facilities obtained from banks and other financial institutions. Consequently, the Borrowings-to-Funding ratio increased to ~93% during 9MFY26 (9MFY25: ~88%), indicating a higher reliance on external funding to support its asset base. Nevertheless, the improved liquidity position provides additional financial flexibility to meet near-term funding obligations.


Capitalization

The capital structure of the Modaraba shows an inclination towards leveraging, as evidenced by the stable equity-to-total-asset ratio of ~59.2% as of 9MFY26 (9MFY25: ~57.7%). The equity-to-total asset ratio improved further, reaching 58% by 9MFY25.


 
 

Sep-26

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(PKR mln)


Mar-26
9M
Jun-25
12M
Jun-24
12M
Jun-23
12M
A. BALANCE SHEET
1. Total Finance-net 1,745 1,814 1,588 1,545
2. Investments 0 0 0 140
3. Other Earning Assets 217 188 247 100
4. Non-Earning Assets 610 687 526 429
5. Non-Performing Finances-net (35) (33) (30) (30)
Total Assets 2,537 2,657 2,332 2,184
6. Funding 624 637 424 596
7. Other Liabilities 411 499 511 335
Total Liabilities 1,035 1,136 935 931
Equity 1,502 1,521 1,397 1,253
B. INCOME STATEMENT
1. Mark Up Earned 978 1,405 1,306 1,772
2. Mark Up Expensed (62) (112) (119) (92)
3. Non Mark Up Income 888 1,089 873 15
Total Income 1,805 2,381 2,059 1,695
4. Non-Mark Up Expenses (1,568) (1,949) (1,646) (1,383)
5. Provisions/Write offs/Reversals (7) (13) (14) (23)
Pre-Tax Profit 230 419 399 288
6. Taxes (158) (205) (181) (101)
Profit After Tax 72 214 218 188
C. RATIO ANALYSIS
1. PERFORMANCE
a. Non-Mark Up Expenses / Total Income 86.9% 81.9% 79.9% 81.6%
b. ROE 6.3% 14.7% 16.5% 16.2%
2. CREDIT RISK
a. Gross Finances (Total Finance-net + Non-Performing Advances + Non-Performing Debt Instruments) / Funding 279.6% 284.7% 374.9% 259.1%
b. Accumulated Provisions / Non-Performing Advances N/A N/A N/A N/A
3. FUNDING & LIQUIDITY
a. Liquid Assets / Funding 36.0% 30.5% 60.5% 17.8%
b. Borrowings from Banks and Other Financial Instituties / Funding 92.4% 81.8% 79.9% 85.3%
4. MARKET RISK
a. Investments / Equity 0.0% 0.0% 0.0% 11.2%
b. (Equity Investments + Related Party) / Equity 0.0% 0.0% 0.0% 0.0%
5. CAPITALIZATION
a. Equity / Total Assets (D+E+F) 59.2% 57.2% 59.9% 57.4%
b. Capital formation rate (Profit After Tax + Cash Dividend ) / Equity 6.3% 15.3% 11.4% 17.6%

Sep-26

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