Press Release
Date: 12-May-22
PACRA Upgrades Broker Fiduciary Rating of KTrade Securities Limited

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 | ~60%

Regulatory Disclosures Analyst Applicable Criteria Related Research
Afnan Iqbal

Methodology | Broker Fiduciary Rating | Jan-21

Sector Study | Brokerage & Securities | Jan-22

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.