Press Release

VIS Reaffirms Ratings of First Paramount Modaraba at BBB/A-3

Karachi, December 27, 2019: VIS Credit Rating Company Limited (VIS) has reaffirmed entity ratings of First Paramount Modaraba (FPM) at ‘BBB/A-3’ (Triple B/A-Three). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on December 28, 2018.

The assigned ratings incorporate improvement in asset quality indicators and financial performance of FPM’s business segments. Leverage indicators continue to remain within manageable levels. However, ratings are constrained by volatility in revenues of the company on timeline basis which has translated into limited growth in profitability; trend in topline growth will therefore be monitored over time. Ratings also incorporate cyclicality in revenue generation where revenue recognition is higher in second half of the financial year.

Despite growth in financing portfolio, topline declined due to lower revenue from the in-house petrochemicals venture as one of the clients delayed contract renewal; client concentration with respect to the same is sizeable. Nevertheless, overall profitability increased in FY19 on account of recovery in operating performance of consulting business. Going forward, management projects its in-house ventures to continue supporting its profitability levels.

Although concentration in the Certificate of Musharaka portfolio is notable, the modaraba has adequate liquidity and access to credit lines to fulfill any unexpected withdrawal requests. Management has been planning to strengthen equity base; developments in this regard have not materialized to date. The modaraba’s ability to maintain portfolio quality indicators and improve profitability while maintaining leverage within prudent limits will continue to be monitored by VIS.

For further information on this rating announcement, please contact the Muhammad Ibad Desmukh (Ext: 205) or Mr. Javed Callea (Ext: 201) at 021-35311861-71 or fax to 021-35311872-3.



Javed Callea
Advisor

Applicable Rating Criteria: Non Bank Financial Companies (October 2017)
http://www.vis.com.pk/kc-meth.aspx

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report. VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright December 27, 2019 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.