Karachi, May 27, 2023 (PPI-OT):VIS Credit Rating Company Limited has reaffirmed entity ratings of ‘BBB+/A-2’ (Triple B Plus /A-Two) assigned to Insight Securities Limited (‘INSL’ or ‘the Company’). The long term rating of ‘BBB+’ signifies adequate credit quality with reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on March 16, 2022.
INSL is a family-owned private limited company principally engaged in provision of equity brokerage services mainly to domestic retail and institutional clients. The reaffirmation of the ratings takes note of the Company’s consistent market positioning and conservative financial risk profile. The Company has a balance sheet with no outstanding debt, maintaining its position consistently throughout the years. The management is committed to preserving a debt-averse strategy, aiming to achieve projected growth through organic means.
INSL’s operating profile has been impacted on account of decline in trading volumes and low trading activity during FY22 and HFY23. Commission income depicts decline on timeline basis, however, dividend income of 26.9m in FY22 provided comfort to the operating profile to some extent. Profitability profile was also impacted due to decline in core income, during the year the Company posted a negative bottom-line. The cost to income ratio depicted deterioration on account of low trading activity and decline in core brokerage income, curtailment of expenses along with diversification in revenue streams to reduce dependence on brokerage commission will remain important going forward.
Market risk continues to remain on the higher side as the Company has a sizeable proprietary book. Liquidity of the Company is backed by a sound liquid asset base which provides 5.4x (FY21 2.3x) times coverage to total liabilities. Capitalization indicators continue to remain manageable however equity base remains small. Going forward, improvement in market share, operational efficiency and equity base, maintenance of liquidity and capitalization indicators along with diversified revenue streams would remain important for the ratings.
For more information, contact:
Director Compliance and Rating Analytics,
VIS Credit Rating Company Limited
VIS House, 128/C, 25th Lane off Khayaban-e-Ittehad,
Phase VII, DHA, Karachi, Pakistan