Rating Details	Rating Type	BFR
	Dissemination Date	Current (12-May-22 )	Previous (26-May-21)
	Action	Upgrade	Initial
	Rating	BFR 3++	BFR 3+
	Outlook	Stable	Stable
	Rating Watch	-	-

Rating Rationale	Factor	Comment
	Ownership	Major Shareholding of the Company is vested with Oxford Frontier Capital Limited.
	Governance	The Board is comprised of three members all of whom are family members. The Company is in the process to further enhance the governance framework.
	Management and Client Services	Management team is well experienced while integration of technology into the systems results in efficient reporting mechanism and customer satisfaction.
	Internal Controls and Regulatory Compliance	Outsourcing of internal audit and separation of compliance and risk department is considered positive.
	Business Sustainability	The Company registered a considerable growth amidst augmentation in client base; however, significant dependence on equity brokerage income is a constraint.
	Financial Sustainability	The Company is not engaged in proprietary trading which limits the market risk. Leverage free capital structure provides support to the rating.

Key Rating Drivers

The rating upgrade signifies the improving position of KTrade Securities Limited (Ktrade) in the brokerage industry. A strong internal control framework emanating from outsourced internal audit and independent risk management function provides comfort. The management team consists of seasoned professionals providing the clients with state-of-the-art services such as, online trading, mobile-app and up-to-date research reports. A dedicated customer service department is also present for client facilitation. The benchmark app ‘KTRADE’ has a user-friendly interface and it is one the most used app of financial industry. The rating accounts for the strong sponsors’ profile and an adequate governance structure which may be enhanced further. The assigned rating is supported by immense growth in brokerage revenue over the years amid increased client base. The topline is concentrated to commission on equity brokerage; however, the Company has diversified its product base to augment the revenue stream. The equity has shown considerable improvement during the period under review with a leverage free capital structure. The expansion strategy is materializing where the Company has opened new branches in various cities and has increased the head count accordingly. The ratings are dependent on the management’s ability to strengthen revenue base by augmenting consultancy and advisory services. Improvement in market share and sustaining profitability from core operations remains critical.

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 - 58%

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-22

Disclaimer

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