Press Release
VIS Maintains Entity ratings of Arif Habib Limited
Karachi, May 26, 2025: VIS Credit Rating Company Limited (VIS) has maintained the entity ratings of Arif Habib Limited at ‘AA-/A1’ (Double A Minus/A One). Long term rating of ‘AA-’ signifies high credit quality, and strong protection factors. Risk is modest but may vary slightly from time to time because of economic conditions. Short term rating of A1 denotes strong likelihood of timely repayment of short-term obligations, with excellent liquidity factors. Outlook on the assigned ratings has been changed to ‘Stable’ from ‘Rating Watch – Developing’. Previous rating action was announced on November 05, 2024.
Arif Habib Limited (‘AHL’ or ‘the Company’), established in 2004, is one of the leading brokerage and financial services company in the country, and is engaged in provision of equity and money market brokerage, interbank foreign exchange, and corporate advisory services. The Company is registered with Securities & Exchange Commission of Pakistan (SECP) and holds Trading Rights Entitlement Certificate (TREC) granted by Pakistan Stock Exchange Limited (PSX). External auditors of the Company are from Category ‘A’ of State Bank of Pakistan’s list of auditors.
The Company underwent a demerger, effective July 01, 2023, whereby non-core assets and liabilities of the Company were divested to the Holding Company, Arif Habib Corporation limited (AHCL), for which AHCL allotted 13.3 million ordinary shares to AHL’s shareholders, excluding AHCL, based on a swap ratio of 0.8673:1. the Company’s equity was adjusted by PKR 4,169.7 million following the divestiture of non-core assets and liabilities under the demerger arrangement. However, assigned ratings continue to be underpinned by the strong sponsor profile, with ~74% shareholding vested with Arif Habib Corporation Limited (AHCL).
With respect to operations, the Company has recorded healthy growth in revenue, primarily driven by strong rally in the stock market over the last 22 months. While the Company’s revenue is primarily derived through equity brokerage, the presence of a strong advisory segment supports revenue diversification. Profitability of the Company was largely supported by significant reduction in finance cost, resulting from lower debt levels and a favorable interest rate environment. Liquidity profile of the Company is considered sound. Market risk of the Company is low, given the investments in equity securities related to ready future transactions. Negligible gearing coupled with enhanced profitability due to the bullish trend in stock market provides support to the Company’s capitalization profile. Going forward, sustainability of revenue growth along with maintenance of market risk, liquidity profile as well as further improvement in the capitalization profile will be important for the ratings.
For further information on this rating announcement, please contact at (021) 35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria: Broker Entity Rating
https://docs.vis.com.pk/docs/SecuritiesFirm202007.pdf
VIS Rating scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf