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Karachi: VIS Credit Rating Company Limited has reaffirmed the entity ratings of Foundation Securities (Pvt) Limited at ‘A/A2’, with a stable outlook. The long-term rating of ‘A’ indicates good credit quality and adequate protection factors, though risks may fluctuate with economic conditions. The short-term rating of ‘A2’ reflects a good likelihood for timely repayment of short-term obligations, supported by strong liquidity factors.
Foundation Securities, headquartered in Karachi, provides equity brokerage services with a limited presence in the commodity segment. The company caters to domestic retail and institutional clients, high net worth individuals, and international broker dealers. It operates four branches in Lahore, Rawalpindi, and Islamabad and is registered with the Securities and Exchange Commission of Pakistan. The company holds licenses from the Pakistan Stock Exchange and the Pakistan Commodity Exchange.
The ratings highlight the robust profile of Foundation Securities’ sponsors, primarily owned by Askari Bank Limited and the Fauji Foundation Group. Askari Bank holds an AA+/A1+ rating, while the Fauji Foundation is a prominent conglomerate in Pakistan with diverse business interests and strong financial backing. These sponsors provide financial support to Foundation Securities.
The company’s financial profile showed growth in 2024, driven by an increase in brokerage revenue amid a surge in industry trading volumes. This growth led to improved operational efficiency and profitability. The company’s liquidity is considered adequate, with minimal market risk due to the absence of proprietary trading. Its capitalization is supported by low debt levels and a substantial equity base. While leverage is elevated, it remains manageable after accounting for customer assets held with banks.
Looking ahead, sustained revenue and profitability growth, alongside improved liquidity and stable market risk and capitalization profiles, will be crucial for maintaining the company’s ratings.