PACRA maintains Broker Entity Ratings of Intermarket Securities Limited (Formerly EFG Hermes Pakistan Limited)

Intermarket Securities Limited ('IMS' or the 'Company') has a sustained market presence. As a strategic move to increase its foreign clientele outreach, the Company merged with and into EFG Hermes Pakistan Limited, effective from July 2024. CY24 has been a great boon for the brokerage industry, specially after the lackluster market volumes observed during CY22 and CY23. Investor confidence rebounded during the year, with the declining interest rates providing the incentive to investors to shift from fixed income to equity securities. Market volumes surged and as a result, the KSE-100 Index continuously breached its historic high levels during the year. The momentum is expected to continue on during 1QCY25; however, improving macro-economic indicators and political stability shall remain key. IMS has diversified its revenue streams through equity and commodity brokerage, MFS/MTS, and corporate finance. Taking advantage of the market uptick, the Company's topline surged by a considerable ~90% during 9MCY24. Moreover, the topline was aided through ~PKR 151mln of realized capital gains on sale of proprietary investments. Consequently, the Company's bottom-line rose immensely to ~PKR 278mln during 9MCY24 (SPLY: ~PKR 17mln). ISL manages its proprietary investment book on an active basis to monitor risks, with proprietary investments constituting ~25% of equity at end-Sep'24. The Company's capital structure is leveraged at ~30% at end-Sep'24, with a strong equity base of ~PKR 1,775mln at end-Sep'24. ISL has a stable ownership structure, with majority ownership vesting with the sponsoring family. The business acumen of the primary sponsor, Ms. Erum Balwani, is well acknowledged. The Company has a strong seven-member board, with board committees chaired by independent directors. ISL has a functional organizational structure, supported by an experienced management team. Client services are sound, with economic and equities research present. The internal control framework is supported by separate internal audit, compliance, and risk management functions. ISL plans to enhance its market share by consolidating foreign clientele of EFGH, while focusing on improving its retail customer base.
Going forward, maintenance and improvement of product and customer diversification is vital. Moreover, growth of topline and sustainability of profitability margins remain key. Meanwhile, upholding internal controls, retention of key management, and diligently monitoring of risks are important.

About the Entity
Intermarket Securities Limited (formerly EFG Hermes Pakistan Limited) was incorporated on September 27, 1999, under the Companies Act, 2017 as a Private Limited Company. In November 2006, it was converted into a Public Unquoted Company. Effective from March 20, 2008 the Company was listed on the Pakistan Stock Exchange Limited. Intermarket Securities Limited acquired EFGH during CY24, with an effective merger date of 1st July, 2024. The Company is a full-service brokerage platform offering trade execution/settlement, investment banking & advisory as well as equities & economic research. The Company is headed by the CEO, Mr. Wajid Hussain, who has over 25 years of relevant experience.