PACRA maintains Broker Entity Rating of Ismail Iqbal Securities (Pvt.) Limited

Ismail Iqbal Securities (Pvt.) Limited (IISPL or “the Company”) is an established player in the equity brokerage sector, complemented by its services in underwriting, corporate finance, advisory, and research. The Company has established a commendable market share, supported by a diversified clientele that includes institutional and corporate entities, and high-net-worth individuals (HNWIs). This customer base not only strengthens IISPL’s market position but also mitigates dependency on a single client segment. FY24 marked a significant recovery for the equity brokerage industry, with improving investor sentiment driving a substantial increase in trading volumes on the Pakistan Stock Exchange. This resurgence was fueled by stabilizing macroeconomic conditions and renewed confidence in the equity markets, providing brokerage firms like IISPL with a favorable environment to perform in line with the broader market trends. The Company capitalized on this recovery, delivering robust financial results, including a sharp increase in revenue and profitability. Performing better than the market, the Company earned a revenue of ~ PKR 126mln during FY24, increasing the topline by ~96% when compared with FY23. IISPL reported a net profit of ~ PKR 136mln during FY24 (SPLY: a net loss of ~PKR 56mln). The profit was driven by the sharp increase in the topline and a significant realized capital gain during the year. IISPL has an adequate equity base of ~PKR 324mln at end-Jun’24. Effective management of proprietary investment book has mitigated market risk. The business acumen of the primary sponsor is well-noted. The governance framework could be improved by appointing independent directors to enhance oversight. IISPL has a lean organizational structure, with most department heads reporting directly to the CEO. The management is experienced, and the control framework is satisfactory. Adequate risk management and compliance procedures provide support to the ratings. The Company provides prudent services to its clients in the form of complaint management, access to technical and fundamental reports, and a dynamic reporting mechanism which is a strengthening factor. As part of its long-term strategic plans, IISPL has diversified its revenue streams through underwriting and follows a rigid underwriting discipline to manage associated risks.
Going forward, pivotal factors for the rating perspective include improvement in core income, management’s ability to retain its market share, and enhancing the volumes and diversity of revenue to improve its competitive position in the brokerage industry. Meanwhile, upholding sound internal controls, retention of key management personnel and diligent monitoring of risks is important.

About the Entity
Ismail Iqbal Securities (Pvt.) Limited was established in August 06, 2004. The Company operates through two branches, both in Karachi. The Company is owned by three individuals, wherein the majority shareholding (65%) lies with the CEO - Mr. Ahfaz Mustafa. The Company’s board of directors comprises two experienced individuals including the CEO. The other director, Mr. Muhammad Taufique is a non-executive director and provides governance oversight. The Company has appointed M/s Baker Tilly Mehmood Idrees Qamar – Chartered Accountants as the external auditors.