PACRA Maintains Rating for Spectrum Securities Amid Market Growth

Karachi: PACRA has maintained its broker management rating for Spectrum Securities Limited at a BMR3+ level, reflecting a stable outlook. This was announced in a recent review of the company’s performance in the equity brokerage sector.

According to Pakistan Credit Rating Agency Limited, Spectrum Securities Limited showed an increase in market share from approximately 1.8% in FY23 to 2.7% in FY24. This growth is attributed to favorable market conditions, including low market P/E multiples and declining interest rates, which have boosted investor confidence. The strategic vision of the company’s primary sponsor, Mr. Muhammad Owais, played a crucial role in this expansion through timely equity injections.

The rating also acknowledges the company’s governance framework as adequate, although it suggests that the board size could be increased for enhanced oversight. Spectrum Securities Limited’s management structure is streamlined, with most department heads reporting directly to the CEO. The company benefits from a seasoned management team and a strong internal control and risk management framework. However, there is room for improvement, particularly in enhancing internal audit staff strength and separating compliance from finance functions to strengthen the control environment.

The company has seen a significant increase in brokerage revenue, from approximately PKR 42 million in FY23 to PKR 115 million in FY24, driven by increased market activity. Spectrum Securities Limited also manages a proprietary investment book valued at around PKR 23 million as of June 2024, with short-term investments constituting about 6% of its equity, which limits exposure to market risk.

Looking forward, the company aims to continue topline growth and diversify its revenue streams. Retaining key personnel, enhancing customer service tools, and maintaining robust controls remain critical for sustaining its rating.

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