Rating Details	Rating Type	BFR
	Dissemination Date	Current (23-Apr-24 )	Previous (28-Apr-23)
	Action	Maintain	Maintain
	Rating	BFR 2+	BFR 2+
	Outlook	Stable	Stable
	Rating Watch	Yes	-

Rating Rationale	Factor	Comment
	Ownership	The Company is primarily owned by Bank Alfalah Limited; a prominent financial institution, with the ownership stake of ~62%, followed by CLSA Limited with ~25%of the stakes.
	Governance	The Board is comprised of six members, out of which four represents BAFL. CEO is also the part of the Board.
	Management and Client Services	ACLSA has a well developed organizational structure with an experienced management team for efficient operational functions and sound client services. Recently Mr. Mohammad Atif has been replaced. as
	Internal Controls and Regulatory Compilance	The Company is in the process of improving its internal controls to enhance their effectiveness.
	Business Sustainability	ACLSA's topline is concentrated to equity brokerage; however, there is diversity present in the form of investment banking and research. During 9MCY23, the Company earned ~PKR 461mln (SPLY: ~PKR 322ml
	Financial Sustainability	A low-leveraged capital structure provides support to the rating. ACLSA has an adequate equity base of ~PKR 331mln at end-Sep'23. The sponsors have injected an equity of ~PKR 1.2bln in ACLSA.

Key Rating Drivers

The brokerage industry exhibited a notable performance during 2QFY24 based on renewed investor interest. A material equity injection of ~PKR 1.2bln by the primary sponsor shall mitigate the financial effect of the provisions of ~PKR 1.1bln created by the Company during Dec'23. This provision indicates a significant risk regarding the likelihood of collecting outstanding debts owed to the Company. This concerns a need for the creation of the provision vis-a-vis the control environment of the business, hence Rating Watch. To address these concerns, ACLSA has taken steps to enhance its internal controls framework. Moving forward, the materialization of planned revenue and geographical diversification is important for the rating. Maintenance and improvement of market share, and sustainability and growth in revenue and profitability remain vital. Meanwhile, it is imperative to uphold, robust internal controls, retention of key management personnel and diligently monitor risks.

About the Entity
	Legal Structure	Private Limited
	Year of Establishment	23-Sep-03
	Type of License	Trading and Self-clearing
	Majority Ownership	Bank Alfalah Limited ~62%

Regulatory Disclosures	Analyst	Applicable Criteria	Related Research
	Hassaan Ahmad Hassaan.Ahmad@pacra.com +92-42-35869504 www.pacra.com	Assessment Framework | Broker Fiduciary Rating | Jan-24	Sector Study | Brokerage & Securities | Jan-24

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