PACRA maintains Broker Management Rating of Abbasi and Company (Pvt.) Limited

Abbasi and Company (Pvt.) Limited ("ACPL" or the "Company") has a sustained position in the brokerage space, particularly in the Central and Northern regions of the country. The Brokerage industry is experiencing a boom in revenue since October 2023 due to renewed investor interest and attractive scrip valuations increasing volumes traded and pushing KSE-100 Index to historic highs. FY25 is expected to continue on with this trend; however, political stability and macro-economic conditions may play a key role in investor confidence. The assigned rating takes into account the strong business acumen of the sponsoring family. Ownership structure is considered stable with succession planning present within the family. Currently, ACPL has three executive directors on the Board, all being family members. The governance framework may be improved with an increase in the board size and addition of independent oversight. The rating incorporates a well-designed organizational structure with proper departmentalization and clearly defined responsibilities. The experienced management team efficiently manages business operations. Recently, ACPL has revamped its website and mobile application, by the name of 'Trade in', with a user-friendly interface to provide clients with the facility of online trading while a research department is also present. A dedicated customer support department resolves client grievances. The rating reflects a strong internal control environment supported by well-defined policies and an outsourced internal audit function. The presence of separate departments for risk management and compliance is a strengthening factor. Brokerage revenue has increased by ~92% during 9MFY24, with the Company earning ~PKR 50mln during the period (SPLY: ~PKR 26mln). There is limited diversification in the topline through MTS and commodity brokerage. Administrative and operating expenses are high, squeezing the net margins of the Company. During 9MFY24, ACPL earned ~PKR 0.4mln as net profit (SPLY: Loss of ~PKR 30mln). The Company has a zero-leveraged capital structure with the equity base standing at ~PKR 353mln at end-Mar'24.
Moving forward, diversification in revenue streams, customer base, and geographic reach is vital. Moreover, upholding of internal controls and growth in profitability remain important.

About the Entity
Abbasi and Company (Pvt.) Limited was incorporated in 1999 as a private limited company. ACPL is a licensed TRE certificate holder of Pakistan Stock Exchange and a Universal Member of Pakistan Mercantile Exchange Limited. ACPL is a Corporate Member of the Pakistan Stock Exchange and registered with the SECP. In 2017, the Company became a registered research entity. ACPL’s service offering includes Economic and Investment Research, Equity Brokerage and Commodity Brokerage. The clientele of the Company is segmented into three categories i) individuals ii) financial institutions iii) Retail. ACPL is primarily owned by individuals and it is not part of any foreign or local group. The majority shares are owned by Mr. Syed Muhammad Ismail Abbasi who owns 69.7% of the ownership.