Press Release

VIS Reaffirms Entity Ratings of Darson Securities Limited

Karachi, August 30, 2024: VIS Credit Rating Company Limited has reaffirmed entity ratings of Darson Securities Limited at ‘BBB+/A-2’ (Triple B Plus /A-Two). The long-term rating of ‘BBB+’ signifies adequate credit quality; Protection factors are reasonable and sufficient. Risk factors are considered variable if changes occur in the economy. Short-term rating of A-2 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 December 30, 2022.

Darson Securities (Private) Limited (DSL) caters to equity broking services to both retail and foreign intuitional clients. DSL’s operations are run through its corporate office in Karachi while the company’s registered office is in Lahore. The company holds a Trading Right Entitlement Certificate (TREC) issued by the Pakistan Stock Exchange Limited (PSX) since 2000 for Trading & Self Clearing Services. External auditors of the company are Muniff Ziauddin & Co Chartered Accountants. Auditors are on the approved list of auditors published by the State Bank of Pakistan.

Assigned ratings take note of the Company’s market positioning, the Company’s major clientele comprises of domestic retail customers although the Company also caters to foreign retail clients. Total number of clients witnessed an uptick end-HFY24, the Company also opened a new branch during FY23 in Islamabad making it a total of 11 operational branches nationwide. Going forward, the Company is also planning to open another branch in Peshawar to improve geographical diversity and client reach. While brokerage income continues to dominate revenue mix albeit business risk remains low given that major portion of revenue emanates from domestic retail clientele, high dependence on brokerage segment on timeline basis is a constraint on the ratings as diversification in revenues is low.

Assessment of financial profile indicates that the Company’s earning profile remained under stress owing to decrease in the company’s recurring revenues. End-HFY24, core brokerage income decreased due to decline in market volumes, the same impacted operational efficiency of the Company as cost-to-income ratio was reported to be higher end-HFY24. The Company’s liquidity profile continues to remain sufficient, market risk is manageable and capitalization indicators are considered sound. Going forward, improvement in operating income along with augmented revenue base, improvement in cost to income ratio and market share will remain important for ratings.

For further information on this ratings announcement, 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 Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf

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