Press Release

VIS Reaffirms Entity Ratings of Next Capital Limited

Karachi, October 02, 2023: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Next Capital Limited (NCL) at ‘A-/A-2’ (Single A-Minus/A-Two). The long-term rating of ‘A-’ signifies good credit quality; protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-2’ signifies good certainty of timely payment. Liquidity factors and company fundamentals are sound. Access to capital markets is good. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on August 03, 2022.

After witnessing a significant surge in trading volumes in FY21, volumes have depicted a downward trajectory in FY22 and subsequently in FY23. Accordingly, brokerage revenue declined across the industry, hence, bottom line of the Company has come under stress. Nevertheless, ratings draw support from the Company’s sound revenue stream. Going forward, management envisages the market conditions to improve with the decision by the monetary policy committee to keep the interest rates unchanged. Moreover, Company has advisory and consultancy fee in the pipeline, which is expected to provide impetus to the Company’s overall revenue.

Assessment of financial risk indicators depicts an increase in the market risk as Company has increased its quantum of proprietary operations by investing in listed equity securities. Cost to income ratio of the Company has deteriorated on the back of a decline in the operating revenues. While liquidity profile of the Company has shown improvement, the equity has been dented on the back of losses incurred by the Company. Albeit the gearing and leverage indicators are considered to be within manageable levels. Going forward, managing market risk, augmenting revenue base and equity along with managing operational expenses will remain important for ratings.

For further information on this rating announcement, please contact Mr. Shaheryar Khan (Ext: 210) or the undersigned (Ext: 207) at 021-35311861-64 or email at info@vis.com.pk.


Sara Ahmed
Director

Applicable Rating Criteria: Methodology – Securities Firms - July 2020
https://docs.vis.com.pk/docs/SecuritiesFirm202007.pdf

VIS Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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