Press Release
Date: 31-Mar-22
PACRA Assigns Initial Broker Fiduciary Rating to Zafar Securities (Pvt.) Limited

Rating Details Rating Type BFR
Dissemination Date Current (31-Mar-22 )
Action Initial
Rating BFR 3+
Outlook Stable
Rating Watch -

Rating Rationale Factor Comment
Ownership Majority shares are owned by the CEO, Mr. Syed Asim Zafar with an ownership stake of ~80%. A formal succession plan may provide comfort.
Governance ZSPLs board comprised of three directors including the CEO. Ms. Syeda Khola Hussain has passed away recently for which the replacement is in process.
Management and Client Services ZSPL has a lean organizational structure with experienced management. Client servicing may be improved further with a research department.
Internal Controls and Regulatory Compilance ZSPL has sound internal control and regulatory compliance supported by separate internal audit and compliance department.
Business Sustainability The revenue stream is concentrated to equity brokerage, diversification of which may provide support to the topline.
Financial Sustainability ZSPL has an adequate capitalization level with an equity of PKR 286mln at end Jun 21.

Key Rating Drivers Zafar Securities (Pvt.) Limited (ZSPL or the Company) is primarily engaged in the provision of equity brokerage services. The assigned rating incorporates adequate ownership structure and governance framework which may be improved with an increase in board size and inclusion of independent insight. The organizational structure is adequate and the segregation of internal audit and compliance function is well noted; however, the same may be strengthened further with addition of human resource. Clients have been provided with access to online trading terminal and a formal compliant management system. Formation of research department would be encouraging. The IT infrastructure is sound supported by established IT policy and off-site data backup. The internal control and regulatory compliance are considered adequate whereby the Company has established policies and procedures. The topline is primarily concentrated to commission from equity brokerage which clocked in at ~PKR 87mln for FY21 (SPLY PKR 39mln). The product slate may be diversified further to support the topline. The concentration of revenue from top ten investors has a room for improvement. The rating also incorporates the leverage free capital structure.

About the Entity
Legal Structure Private Limited
Year of Establishment 28-Jun-99
Type of License Trading and Self-clearing
Majority Ownership Mr. Syed Asim Zafar | ~80%

Regulatory Disclosures Analyst Applicable Criteria Related Research
Hassaan Ahmad

Methodology | Broker Fiduciary Rating | Jan-21

Sector Study | Brokerage & Securities | Jan-22

Disclaimer This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA. The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.