PACRA Maintains Entity Ratings of Dawood Equities Limited - Press Release issued by The Pakistan Credit Rating Agency Limited.

Lahore -- September 21, 2022 (PPI-OT)

Following is the text of press release issued by The Pakistan Credit Rating Agency Limited (PACRA)

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Dawood Equities Limited ('DEL' or 'the Company') mainly provides the services of equity brokerage while the Company has diversified its revenue base with the addition of underwriting income. DEL has a sustained position in the market and the brokerage revenue mainly stems from Retail and HNWI clients, while corporate clientele is also present. Parallel to the declining market volumes, the brokerage revenue has decreased by ~42% to ~PKR 76mln in FY22 when compared with FY21; however, the topline has been augmented by ~PKR 34mln of underwriting income.

The Company earned a profit after tax of ~PKR 13mln during FY22 (FY21: ~PKR 42mln), where the decrease is mainly due to unrealized losses on prop-book and lower brokerage revenue as a result of low market volumes. The equity of DEL is adequate and stood at ~PKR 283mln at end-Jun'22; however, credit lines are available to augment the equity base. The ratings take comfort from a low-leveraged capital structure.

The Company manages its own proprietary book which exposes it to market risk to some extent; however, the Investment Committee (IC) keeps a close eye on market conditions to effectively manage its proprietary investments. The Company has a strong governance structure supported by the presence of independent directors and requisite board-level committees.

The ratings take comfort from an experienced and qualified management team. The client services are...