The Pakistan Credit Rating Agency Limited
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Ayesha Qasim

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PACRA Assigns Initial Broker Management Rating to AHM Securities (Pvt.) Limited

Rating Type Broker Management
(14-Jun-22 )
Action Initial
Long Term BMR3+
Short Term -
Outlook Stable
Rating Watch -

AHM Securities (Pvt.) Limited (“AHM” or “the Company”) is primarily engaged in the provision of equity brokerage services with the retail segment as the major part of overall clientele. The Company has a lean organizational structure where all the departmental heads reports to the CEO except the company secretary who reports to the board of directors. The rating takes note of the experienced and qualified management team and adequate internal control framework. The company secretary is also looking after the compliance department which could be made independent to improve its functionality. Formation of an independent risk management department is encouraged. The rating accounts for the adequate client services including online trading, mobile-app, real-time transaction alerts and complaint resolution process. The rating takes comfort from the sound financial profile of the main sponsor. The governance framework has room for improvement with the inclusion of qualified and independent directors. Increasing the board size may also result in creation of independent committees at the board level. The Company has a competitive clientele; however, limitation exist in terms of revenue diversification. On the back of improved trading activity at PSX, the Company experienced a significant improvement in brokerage revenue in FY21. However, the recent uncertainty in the equity market amid ongoing political tension may have an adverse impact on topline for FY22. The equity has also been improved in FY21 owing to the improvement in topline and the contribution from capital gains on equity market exposure. The Company is running a proprietary book which may expose it to market risk and results in conflict of interest. A low leveraged capital structure provides comfort. Going forward, the Company has planned to focus on institutional and corporate clientele.
Going forward, improvement in core income, market share and profitability and materialization of planned business strategies remains critical. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel and diligent monitoring of risks is important.

About the Entity
AHM Securities (Pvt.) Limited is primarily engaged in provision of equity brokerage services. Ownership of the Company lies within the same family. The Chairman, Mr. Adam Haji Muhammad owns ~99.6% of the total shares. Rest of the shareholding lies with Mr. Anis Haji Muhammad and Mr. Feroz Haji Muhammad. The board of directors comprises of three members all of whom are the shareholder family members. The Chairman, Mr. Adam Haji Muhammad possesses enormous experience in capital markets, he has been working as a stock broker for over 25 years. The CEO - Mr. Hammad Tahir holds a Master’s degree in Business Administration and Economics. He has been with the Company since its inception and serves as the Chief Executive Officer.

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's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. 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.