PACRA maintains Broker Entity Ratings of KTrade Securities Limited

KTrade Securities Limited ('KTrade' or the 'Company') has rapidly grown its market presence in the brokerage space. KTrade focuses primarily on equity brokerage while diversification is present in the form of corporate finance and money market operations. The market share of the Company has steadily grown due to KTrade's focus on technological platforms aimed at attracting new retail investors The ratings take into account the business acumen of the primary sponsor - Oxford Frontier Capital, a UK-based Fintech-focused VC/PE. Oxford Frontier Capital is majorly owned by Mr. Ali Farid Khwaja, who is also the Chairman of KTrade. The primary sponsor's business renown and strategic vision has enhanced the footprint of the group to establish KTrade Saudia, resulting in increased foreign clientele for the Company. The governance structure is considered sound with the presence of independent directors and board committees well noted. The rating takes comfort from a well-defined organizational structure and experienced management team. Internal audit, compliance, and risk management functions are present for an efficient control environment. The Company’s topline primarily relies on brokerage income, which saw a ~137% increase in FY24, reaching ~PKR 206mln, up from ~PKR 86mln in FY23. KTrade's recent focus on corporate finance has resulted in an impressive ~89% growth in revenue from advisory services. However, the Company's strategy of rapid expansion and the increased cost of doing business raised administrative expenses by ~48% in FY24 when compared to FY23, resulting in an operating loss of ~PKR 63mln in FY24 (FY23: ~PKR 187mln). On the other hand, other income surged by ~112% during FY24 on account of higher interest income earned on deposits. Resultantly, the Company reported a net profit of ~PKR 36mln, a notable turnaround from the ~PKR 135mln loss in FY23. The Company has a zero-leveraged capital structure with an adequate equity base of ~PKR 427mln at end-Jun'24.
Going forward, the materialization of planned business strategies to provide boost to the topline is critical to the ratings. Improvement in market share and sustaining profitability from core operations remain crucial. Meanwhile, upholding strong internal controls, sound governance structure, retention of key management personnel and diligent monitoring of risks is important.

About the Entity
Ktrade was incorporated in 2013 as a TREC Holder of the Pakistan Stock Exchange. Oxford Frontier Capital Limited is the major shareholder of the Company holding ~60% of the ownership. The Company’s service offering includes Economic and Investment Research, Equity Brokerage, and Advisory service. With its head office based in Karachi, the Company operates through four offices, one in Multan, one in Lahore and two in Karachi whereas a facilitation office is present in Islamabad. The board of directors of the Company comprises five experienced professionals, including the CEO and three independent directors. Mr. Ali Khwaja, the chairman of the Company brings over 15 years of experience in equity research and investments. His career includes leadership roles at Autonomous Research in London, where he led equity research for European Fintech companies, and as the CFO and Board Director of Safe Charge Group, a global payments company listed on the London Stock Exchange.