VIS Reaffirms Ratings for Next Capital Limited Amid Profitability Challenges

Karachi: VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of Next Capital Limited at ‘A-/A2’. The ratings indicate good credit quality with adequate protection factors, although risk factors may vary with economic changes. The outlook on the ratings remains ‘Stable’, with the previous rating action announced in October 2023.

According to VIS Credit Rating Company Limited, Next Capital Limited was incorporated in 2009 and primarily provides equity broking services to a range of clients including domestic retail, high net worth individuals, local institutions, and foreign broker dealers. The company also has a significant presence in investment banking and corporate financial advisory in Pakistan. With a head office in Karachi and a branch in Lahore, Next Capital holds a Trading Right Entitlement Certificate from the Pakistan Stock Exchange Limited. The company’s auditors, Baker Tilly Mehmood Idrees Qamar, are on the State Bank of Pakistan’s approved list.

The company’s financial assessment reveals challenges in profitability despite increased operating revenues in FY24, mainly due to growth in brokerage and advisory services. However, a high cost-to-income ratio has led to operating losses. While liquidity is adequate and market risk is low, supported by reduced proprietary investments, the company’s equity base is smaller than its peers. Future improvements in financial strength are expected to depend on revenue expansion, operational efficiency, and liquidity enhancements, which are crucial for maintaining the current rating.

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