PACRA Maintains Broker Entity Ratings of Trust Securities & Brokerage Limited

Trust Securities & Brokerage Limited’s (“TSBL” or “the Company”) core product portfolio centers around equity brokerage services, while its renown in the commodity brokerage space has improved significantly over the recent years. TSBL enjoys an adequate market share of ~2% whereas the clientele is diversified between corporate/Institutional and Retail/HNWIs. Challenging economic conditions in Pakistan, including political uncertainty, high inflation, and volatile interest rates affected the brokerage industry and investors' sentiments, particularly in FY22 and FY23, leading to a decrease in market activity level and profitability. However, since 2HFY24 the market sentiments improved with enhanced market volumes owing to improving economic conditions. During 9MFY24, TSBL’s revenue increased to ~PKR 164mln from ~PKR 121mln during SPLY. The Company reported a PAT of ~PKR 84mln when compared to the net profit ~PKR 22mln during SPLY. This improvement can be attributed primarily due to gain on sale of short term investments as well as an increase in brokerage income. The Company has a low-leveraged capital structure. The Company has an adequate equity base of ~PKR 363mln at end-Mar’24 (SPLY: ~PKR 312mln). The market risk is minimal due to the Company’s limited investment in equity securities amounting to ~PKR 20mln. The business acumen of the primary sponsors has been effective in driving growth in the Company's brokerage business. The Company has a strong governance framework supported by the presence of independent directors and board-level committees. Additionally, TSBL has a well-developed organizational structure that ensures efficient operations, clear lines of responsibility, and effective communication within the Company. The management is seasoned, and the control framework is deemed satisfactory, primarily attributed to the presence of a dedicated risk management department within the Company. Moreover, TSBL has opted to outsource its internal audit department, which bodes well for the Company's control framework. As a part of long-term strategic plans, TSBL will be leveraging its growing market share in PMEX to aid the Company’s topline going forward. The improvement of the technological platform and geographical diversification is also under consideration.
Going forward, the company will focus on revenue diversification, geographical expansion, and enhancement of PSX and PMEX market share. Simultaneously, it is imperative to uphold robust internal controls, retention of key management personnel, and diligently monitor risks.

About the Entity
Trust Securities & Brokerage Limited holds a TREC license from the Pakistan Stock Exchange and is also a member of the Pakistan Mercantile Exchange Limited. The Company was established in 1993, but the current owners took over in 2017. Mr. Junaid Shehzad Ahmed, with a wide-ranging business presence in both Pakistan and overseas, primarily owns the company. The board of directors consists of seven members, including two independent directors, three non-executive directors, and two executive directors. Mr. Abdul Basit, who has been with TSBL for the past 28 years, serves as the CEO and possesses expertise in various areas such as corporate, business, Company laws, as well as SECP and NCCPL rules and regulations.