PACRA Maintains Entity Ratings of Dawood Equities Limited

Dawood Equities Limited ('DEL' or the Company) has steadily improved its market presence over the past year. DEL focuses primarily on equity brokerage services while underwriting and consultancy services are also provided. The clientele is concentrated to Retail and HNWI's, while the Company is aiming to enhance its footprint in Institutions/Corporates segment. FY24 was a favorable period for the brokerage industry, with the KSE-100 Index reaching historic highs and surpassing the 81k mark for the first time in June 2024. This milestone attracted significant interest from both local and foreign investors. Additionally, the continuous reduction in the headline inflation, and decrease in policy rate, is likely to drive fresh investments as investors shift their focus from fixed-income securities to equities. While FY24 results were promising for the brokerage sector, maintaining political and economic stability will be crucial to sustaining investor confidence in FY25. DEL’s performance was in line with the market's upward trend. The Company earned a revenue of ~PKR 132mln during FY24 (SPLY: ~PKR 62mln). During FY24, the Company reported a net profit of ~PKR 33mln as compared to a net loss of ~PKR 24mln in FY23. This surge in profitability was primarily driven by higher brokerage income and underwriting commissions. DEL has an adequate equity base of ~PKR 294mln at end-Jun'24. The market risk is negligible as the Company has a low proprietary trading book which is effectively managed by a dedicated team. Ownership structure is considered stable, with the business acumen of the primary sponsor well noted. The ratings take comfort from an experienced and qualified management team. The client services are adequate, supported by a research analyst while the strength of the research department may be enhanced. The control framework is deemed satisfactory, primarily attributed to the presence of a risk management department. Moreover, DEL is expanding its branch network through franchising model.
Moving forward, income diversification, enhancement or sustainability in market share, and sustainability in revenue and profitability remains vital. Meanwhile, it is imperative to uphold robust internal controls, retention of key management personnel, and diligently monitor risks.

About the Entity
Dawood Equities Limited was incorporated under the Companies Ordinance 1984, on May 3, 2006 as public limited company. The Company obtained listing on Pakistan stock Exchange in 2008. Equity International Limited owns 21% stake in the Company followed by Mr. Ayaz Dawood (19%). The Company’s service offering includes economic and investment research, equity brokerage, and corporate finance & financial advisory services. The Company operates through seven branch offices, located in Karachi, Hyderabad, Lahore, Faisalabad and Sargodha, reporting to the Head Office in Karachi. Mr. Aziz Habib is the CEO of the Company having diverse experience brokerage business. The Company’s Board of Directors (BoD) comprises seven members, which include two independent directors, four non-executive directors and one executive director including a female director in conformity with the Code of Corporate Governance (CCG).