Press Release

VIS Maintains Entity Ratings of Foundation Securities (Private) Limited

Karachi, May 25, 2021: VIS Credit Rating Company Ltd. (VIS) has maintained the entity ratings of Foundation Securities (Private) Limited (FSL) at ‘A-/A-2’ (Single A Minus/A-Two) with ‘Stable’ outlook. The previous rating action was announced on April 22, 2020.

After witnessing a dismal performance in FY18 and FY19, the equity market remained fascinating during the year FY20. Positive investor sentiments resulted from improving macroeconomic indicators gathered investor’s interest. Also, increased in trading volumes due to COVID-19 led uncertainty also generated also helped brokers to generate higher revenues.

FSL maintains a conservative asset allocation strategy, with more than half the asset base being maintained in the form of cash and bank balances. During FY20, the company took part in proprietary equity investments stands at 4% of the total assets. With majority (54%) of the asset base invested in liquid assets, liquidity profile of the company is considered sound. FSL’s asset based increased significantly by 51% mainly on the back of high trade and other payables in FY20, which further increased in 1HFY21.

Given the increase in short term loan and trade payables as at 1HFY21, the company’s gearing and leverage have both increased. The rating assessment of FSL’s takes into account an element of sponsor support. Further, FSL’s conservative asset deployment strategy is also a positive rating determinant. Rating constraints for FSL include significant reliance on equity brokerage segment. Accordingly, the assigned rating remains dependent on maintaining leveraging & gearing, in line with FSL’s long term trend.


For further information on this rating announcement, please contact the undersigned (Ext: 201) or Mr. Arsal Ayub, CFA (Ext: 216) at 021-35311861-71 or email at info@vis.com.pk.



Javed Callea
Advisor

Applicable rating criteria: Methodology - Securities Firms Rating (July 2020)
https://s3-us-west-2.amazonaws.com/backupsqlvis/docs/SecuritiesFirm202007.pdf

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 May 25, 2021 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.