The Pakistan Credit Rating Agency Limited
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Afnan Iqbal

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PACRA Maintains Broker Management Rating of Abbasi and Company (Pvt.) Ltd

Rating Type Broker Management
(23-Jun-23 )
(24-Jun-22 )
Action Maintain Maintain
Long Term BMR2 BMR2
Short Term - -
Outlook Stable Stable
Rating Watch - -

Abbasi and Company (Pvt.) Limited (ACPL or the Company) is considered a pioneer of the northern region in the brokerage industry. The rating incorporates the Company's sustained position in the market. The rating signifies a strong internal control environment supported by an outsourced internal audit, a dedicated risk and compliance department, and the presence of audit and risk management committees at board level. The rating incorporates the strong business acumen of Mr. Muhammad Ismail Abbasi who is associated with the financial industry for more than ~35 years. The assigned rating takes into account a sound ownership structure. The governance framework may be enhanced further with the induction of non-executive and certified independent directors. The assigned rating also takes into account ACPL's well-developed organizational structure with a qualified and experienced management team. The existence of a proprietary book exposes the Company to market risk; however, its' comparatively small size standing at ~9% of equity at end-Dec'22 limits the risk. The Company aims to capture the untapped online retail market with the help of its mobile app “Trade In”, while a plan to incorporate a corporate finance department is also under review.
The Company's operating revenue is mainly concentrated in equity brokerage, where diversification in the product slate exists in the form of MTS services and commodity brokerage. The Company earned revenue of ~PKR 17mln during 1HFY23 (1HFY22: ~PKR 30mln), the decrease resulting from the low market volumes during 1HFY23 so far. Subsequently, the Company reported a net loss of ~PKR 22mln during 1HFY23 (1HFY22: ~PKR 20mln) emanating from unrealized losses on prop book and low revenue earned. The Company's equity base stood at ~PKR 386mln at end-Dec'22. Going forward, improvement and diversification in core income, sustainability of market share and profitability, and materialization of planned business strategies remain critical. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel, and diligent monitoring of risks is important.

About the Entity
Abbasi and Company (Pvt.) Limited was incorporated in 1999 as a private limited company. ACPL is a licensed TRE certificate holder of Pakistan Stock Exchange and a Universal Member of Pakistan Mercantile Exchange Limited. ACPL is a Corporate Member of the Pakistan Stock Exchange and registered with the SECP. In 2017, the Company became a registered research entity. ACPL’s service offering includes Economic and Investment Research, Equity Brokerage and Commodity Brokerage. The clientele of the Company is segmented into three categories i) individuals ii) financial institutions iii) Retail. ACPL is primarily owned by individuals and it is not part of any foreign or local group. The majority shares are owned by Mr. Syed Muhammad Ismail Abbasi who owns 69.7% of the ownership.

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.