Karachi, March 16, 2022: VIS Credit Rating Company Limited has assigned an initial entity ratings of ‘BBB+/A-2’ (Triple B Plus /A-Two) to Insight Securities Limited (‘INSL’ or ‘the Company’). The long term rating of ‘BBB+’ signifies adequate credit quality with reasonable and sufficient protection factors. Risk factors are considered variable if changes occur in the economy. Short term rating of ‘A-2’ denotes good certainty of timely payments coupled with sound liquidity and company fundamentals. Outlook on the assigned ratings is ‘Stable’.

Established in 2016, INSL is a small-sized brokerage house with market share of 0.9% as of FY21 (FY20: 0.81%). INSL is a family-owned private limited company principally engaged in provision of equity brokerage services mainly to domestic retail and institutional clients. The assigned rating incorporates the gradual improvement in market positioning over the years and conservative financial risk profile of the Company, given that the balance sheet remained debt free during the past 2-year period (FY20-21).

INSL’s profitability has depicted volatility over the years, moving in tandem with stock market volumes. Nevertheless, the Company operates on a lean operating expense model, as reflected by efficiency ratio averaging 69% in the last 5-year period. INSL’s brokerage commission emanates in equal parts from retail and corporate clientele, as indicated by the last 3-year data. Given INSL’s limited operational track record, the Company’s brokerage business does depict client concentration. Cognizant of the same, the management is focused on growing the sales function.

As such the exposure to liquidity and credit risk is manageable, given sizable liquid asset holdings and sound aging profile of receivables. Nevertheless, proprietary investment portfolio is sizable in relation to equity and does depict scrip concentration. Accordingly, the exposure to market risk, and an investment policy with broad thresholds, are rating constraints. Rating is further constrained by the size of INSL’s capital buffer, and the Company’s operational status as a Private Limited Company. The assigned rating remains dependent on maintenance of business and financial risk metrics in line with benchmarks.


For further information on this rating announcement, please contact the undersigned (Ext: 201) or Arsal Ayub, CFA (Ext: 216) at 021-311861-71 or fax to 021-35311872-3.






Javed Callea
Advisor

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

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