Press Release

VIS Reaffirms Entity Ratings of Next Capital Limited

Karachi, November 28, 2024: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Next Capital Limited at ‘A-/A2’ (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 ‘A2’ signifies good likelihood of timely repayment of short-term obligations with sound short-term liquidity factors. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 02, 2023.

Next Capital Limited (‘NCL’ or ‘the Company’) was incorporated in December, 2009. NCL caters primarily to equity broking services to domestic retail and high net worth (HNWI) clients, local institutions, and foreign broker dealers. Alongside, the company has a reputable presence in investment banking & corporate financial advisory business in Pakistan. NCL, besides a head office based in Karachi, runs its retail operations through a branch in Lahore. The Company holds a Trading Right Entitlement Certificate (TREC) issued by the Pakistan Stock Exchange Limited (PSX) for Trading and Self-Clearing Services. External auditors of the company are Baker Tilly Mehmood Idrees Qamar – Chartered Accountants and belong to category ‘A’ on the approved list of auditors published by the State Bank of Pakistan (SBP).

The assessment of the Company's financial profile highlights challenges in profitability. While FY24 saw higher operating revenues, driven by growth in brokerage revenue and the advisory and consultancy segment, brokerage income remained the dominant contributor to the revenue mix. A high cost-to-income ratio continues to weigh on operating profitability, resulting in operating losses for the year. The Company's liquidity profile is considered adequate, and its market risk remains low, supported by a reduction in proprietary investments during FY24. However, the equity base is relatively small compared to peers. Going forward, the Company's ability to strengthen its financial profile will depend on expanding its revenue base, improving operational efficiency and liquidity position, all of which are imperative for maintaining the assigned rating.

For further information on this rating, please contact at 021-35311861-64 or email at info@vis.com.pk.

Applicable Rating Criteria: Securities Firms:
https://docs.vis.com.pk/docs/SecuritiesFirm202007.pdf
VIS Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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