Aba Ali Habib Securities (Pvt.) Limited

CREDIT RATING REPORT | Mar-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
14-Mar-25 A- A2 Stable Maintain -
15-Mar-24 A- A2 Stable Maintain -
15-Mar-23 A- A2 Stable Maintain -
31-May-22 A- A2 Stable Initial -
About the Entity

Aba Ali Habib Securities (Pvt.) Limited, a TREC holder of the Pakistan Stock Exchange and a member of the Pakistan Mercantile Exchange, was founded in 1996, although its operations trace back to 1970. The company is predominantly owned by Mr. Aba Ali Habib, who has over 40 years of experience in equity brokerage. AAH's board of directors comprises six members, three of whom are non-executive, including one independent director, Mr. Munir (CA), and the CEO, Mr. Zahid Ali Habib, who brings extensive expertise in capital markets. The company is registered with the Securities and Exchange Commission of Pakistan (SECP) under the Securities Brokers Regulations 2016.

Rating Rationale

Aba Ali Habib Securities (Pvt.) Ltd. (“AAH” or “the Company”), is a premier brokerage house and integrated financial services provider in Pakistan’s capital markets. The rating underscores AAH’s entrenched market positioning, diversified revenue streams, and prudent risk-adjusted investment strategy, which continue to drive outperformance amid dynamic equity market conditions. AAH operates a multi-asset class platform, delivering equity brokerage, commodity trading, debt market, IPO and Margin Financing System/MTF (MFS/MTS) services to a diversified client base, including institutional investors, corporates, high-net-worth individuals (HNWIs), RDA and retails. The firm’s adherence to fiduciary excellence, coupled with its client-aligned advisory framework, reinforces its reputation as a trusted intermediary in Pakistan’s capital markets. FY24-FY25 witnessed a structural shift in investor behavior, driven by attractive equity valuations (subdued P/E ratios), a monetary easing cycle, and improving macro fundamentals. This catalyzed a ~46% YoY surge in market volumes during 1HFY25, with AAH capturing alpha through a ~51% YoY rise in equity brokerage revenue (1HFY25: PKR 59mln vs. SPLY: PKR 39mln). Strategic portfolio allocation balancing equity and fixed-income exposures supported risk-adjusted returns, while MFS/MTS and dividend income contributed PKR 84mln and PKR 16mln, respectively, underscoring revenue diversification. AAH posted a transformative net profit of PKR 359mln in 1HFY25 (vs. PKR 56mln SPLY), propelled by realized capital gains (PKR 82mln) and marked-to-market gains (PKR 188mln) from its actively managed investment book. The Company’s equity base remains strong at PKR 1,634mln (Dec’24), ensuring ample capital adequacy to absorb market volatility while pursuing growth initiatives. While AAH benefits from seasoned leadership and a lean operational structure, PACRA emphasizes enhancing board independence through certified directors to bolster governance rigor. The recent Lahore branch launch aligns with AAH’s retail penetration strategy, though execution risks around geographic diversification and market share retention (amid industry consolidation) warrant monitoring. Sustained profitability, disciplined risk controls, and talent retention remain critical to rating stability.

Key Rating Drivers

Looking ahead, the realization of projected revenue synergies, continued market share enhancement, and sustained profitability remain paramount. Concurrently, stringent internal controls, retention of key management personnel, and vigilant risk management practices will be crucial in reinforcing AAH’s long-term growth and credit profile.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Aba Ali Habib Securities (Pvt.) Limited

rating analysis

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Profile
Background

Aba Ali Habib Securities (Pvt.) Limited (“AAH" or "The Company”) is a TREC holder of Pakistan Stock Exchange and a Member of Pakistan Mercantile Exchange Limited. The Company has been operating since 1970 and was incorporated under the "Companies Ordinance 1984" in 1996 as a Private Limited Company. The Company is registered with the Securities & Exchange Commission of Pakistan (SECP) under Securities Brokers (Licensing and Operations) Regulations 2016.


Operations

The Company’s service offering includes equity brokerage, commodity brokerage and research. The clientele of the Company is segmented into three categories: i) HNWIs ii) Institutions/Corporates, and iii) Retail, iv)RDA.


Ownership
Ownership Structure

The Company is primarily owned by a single family. The majority shares are owned by Mr. Aba Ali Habib who owns ~99.998% of the ownership.


Stability

The sponsors have sizeable net worth and may provide support to the business in the times of need. Formulation of a well defined succession plan at the shareholder level is encouraged for business sustainability.


Business Acumen

The primary sponsor Mr. Aba Ali Habib has been associated with the capital markets for over forty years, and has diversified experience in the field of equity brokerage.


Financial Strength

The sponsors have a sizeable net worth and provide support to the Company in the times of need.


Governance
Board Structure

AAH's board consists of six directors, including the CEO, Mr. Zahid Ali Habib. Of these, three are non-executive directors, one of whom is an independent director (C.A.)


Members’ Profile

Mr. Abid Ali Habib has a vast experience of over 30 years of Pakistan's capital market. He has been elected as Director of Pakistan Stock Exchange for eight times and Chairman of Trading Affairs Committee, Information Technology Committee, New Product Committee, Company Affairs Committee and Index Committee. He has been director of Central Depository Company and National Clearing Company various times and represented as nominee at various International forums. Mr. Muhammad Munir is a qualified Chartered Accountant. He possess more than 20 years of experience in Capital Market, Asset Management and Mutual Fund Management.


Board Effectiveness

AAH has established an Audit Committee, Investment Committee, HR Committee and Risk Management Committee at the Board level.


Transparency

AAH has appointed M/S Naveed Zafar Ashfaq Jaffery & Company as the external auditors who are placed in the 'A' category by the SBP. The auditors have expressed an unqualified opinion on the Company's financial statements for the year ended June'24. AAH has also outsourced its internal audit department to Afras & Co.


Management
Organizational Structure

AAH has developed an adequate organizational structure and operates through eight departments namely i) Operations ii) Finance iii) Compliance iv) Sales v) Proprietary Trading vi) IT vii) Research and, viii) Human Resource. All of the departmental heads directly report to the CEO. However, the Internal Audit which is outsourced, directly reporting to the Board Audit Committee.


Management Team

The management is experienced to manage the Company’s operations efficiently; however, the quality may be improved further by nurturing of educational profile. The CEO, Mr. Zahid Ali Habib holds an MBA in Finance from Institute of Business Administration. He has an extensive experience of over 25 years in the areas of fund management, capital markets, brokerage operations and regulatory affairs.


Management Effectiveness

AAH's front-end is sourced by 'Catalyst' while the back-end is supported by 'Micro Links'. There is smooth integration between the two which ensures smooth daily operations. Additionally, the Company maintains a strong corporate culture with regard to board meetings, staff management, system management, operational SOPs, and corporate training programs.


Control Environment

The company's risk management framework is overseen by the Risk Management Committee, chaired by Mr. Abid Ali Habib. To enhance operational efficiency and ensure the effective evaluation of internal controls, the company has outsourced its internal audit function. This department is responsible for implementing and monitoring the company's policies and procedures. Additionally, a dedicated Research Department is in place to drive continuous improvement. The Compliance Department plays a crucial role in the regular monitoring of controls and systems, ensuring that all functions adhere to the applicable policies, regulations, and procedures, thereby maintaining the highest standards of governance and compliance.


Business Risk
Industry Dynamics

Low market P/E multiples, declining interest rates, and improving macro-economic indicators renewed investor confidence during FY24, resulting in high volumes for the brokerage industry. The trend has continued in FY25, with significant rate cuts providing the impetus to investors to shift their investments from fixed income to the equity market. The market P/E ratio is still considered low with ample room to improve, indicating that the brokerage industry shall continue to enjoy high volumes during FY25.


Relative Position

AAH's revenue streams are derived from equity brokerage, commodity brokerage, debt markets, IPOs, MTS/MFS, fixed income from bank deposits, dividend income, capital gains, and research.


Revenues

AAH's revenue streams are derived from equity brokerage, commodity brokerage, debt markets, IPOs, MTS/MFS, fixed income from bank deposits, dividend income, capital gains, and research. During 1HFY25, the Company earned a brokerage revenue of ~PKR 59mln (SPLY: ~PKR 39mln) and the income from MFS/MTS and dividend income has provided support with a contribution of ~PKR 84mln and ~PKR 16mln respectively. AAH reported a net profit of ~ PKR 359mln during 1HFY25 (SPLY: a net profit of ~PKR 56mln). The reasons behind the profit increase are twofold: first, a capital gain on sale of equity securities amounting to ~PKR 82mln (SPLY: ~PKR 46mln), and a gain of ~PKR 188mln on re-measurement of investments during 1HFY25 (SPLY: ~PKR 30mln), which directly contributed to the profitability.


Cost Structure

AAH reported an operating expenses of ~PKR 59.6 mln at the end of Dec'24, as comapared to the operating expenses of ~PKR 39.7mln at the end of Dec'23. There is no long term liabilities owned by the Company.


Sustainability

As part of its long-term strategy, AAH has established a new branch in Lahore, which has been operational for over six months, aimed at expanding its retail clientele.


Financial Risk
Credit Risk

AAH has formulated KYC/CDD policies to assess the clients creditworthiness. Client risk profile with respect to the financial position is also maintained. Credit is allowed up to 35% on margin in cash or cash equivalent. Risk control parameters are inbuilt in the system preventing the clients from taking further positions.


Market Risk

AAH is actively running a proprietary book which exposes AAH to Market Risk. However, as part of the investment strategy the management reallocates the funds from equity towards fixed income based on market outlook.


Liquidity Risk

AAH has reported current assets of ~PKR 2,831mln at the end of Dec'24 as compared to current liabilities of ~PKR 1,237mln resulting in a strong liquidity profile. AAH has also made arrangement with different banks for short-term running finance in case if any liquidity need arises.


Capital Structure

AAH has a leverage free capital structure while the short-term borrowings are being utilized to fund the exposure margin requirements. AAH's equity stood at ~PKR 1,634mln in 1HFY25 as compared to equity of ~PKR 1,275mln in FY24.
 
 

Mar-25

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Aba Ali Habib Securities (Pvt.) Limited

financial summary

(PKR mln)

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Dec-24
6M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Finances 916 679 70 326
2. Investments 1,268 906 868 580
3. Other Earning Assets 389 104 6 4
4. Non-Earning Assets 299 224 328 251
5. Non-Performing Finances-net 0 0 0 0
Total Assets 2,872 1,912 1,273 1,162
6. Funding 310 507 132 97
7. Other Liabilities (Non-Interest Bearing) 927 130 67 96
Total Liabilities 1,237 637 199 193
Equity 1,634 1,276 1,074 968
B. INCOME STATEMENT
1. Fee Based Income 143 94 70 108
2. Operating Expenses (60) (91) (64) (90)
3. Non Fee Based Income 288 248 122 (23)
Total Opearting Income/(Loss) 371 251 128 (5)
4. Financial Charges (12) (26) (19) (12)
Pre-Tax Profit 359 225 109 (17)
5. Taxes 0 (2) (3) (0)
Profit After Tax 359 223 106 (18)
C. RATIO ANALYSIS
1. Cost Structure
Financial Charges / Total Opearting Income/(Loss) 3.2% 10.4% 14.6% -235.8%
Return on Equity (ROE) 158.9% 75.9% 28.1% -1.4%
2. Capital Adequacy
Equity / Total Assets (D+E+F) 56.9% 66.7% 84.4% 83.3%
Free Cash Flows from Operations (FCFO) / (Financial Charges + Current Maturity of Long Term Debt + Uncovered Short Term Borrowings) 691.0% 98.5% 153.3% 480.4%
3. Liquidity
Liquid Assets / Total Assets (D+E+F) 48.2% 49.1% 81.7% 58.3%
Liquid Assets / Trade Related Liabilities 150.5% 764.2% 2257.3% 1194.6%
4. Credit & Market Risk
Accounts Receivable / Short-term Borrowings + Advances from Customers + Payables to Customers 10.2% 6.5% 75.8% 32.0%
Equity Instruments / Investments 99.3% 100.0% 100.0% 100.0%

Mar-25

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Aba Ali Habib Securities (Pvt.) Limited

rating scale

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Mar-25

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Aba Ali Habib Securities (Pvt.) Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
  2. Restrictions
    1. No director, officer, or employee of PACRA communicates the information acquired by him for use for rating purposes to any other person, except where required under law to do so. (Chapter III; 10-(5))
    2. PACRA does not disclose or discuss with outside parties or make improper use of the non-public information which has come to its knowledge during a business relationship with the customer. (Chapter III; 10-7-(d))
    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
    1. PACRA fulfills its obligations in a fair, efficient, transparent, and ethical manner and renders high standards of services in performing its functions and obligations. (Chapter III; 11-A-(a))
    2. PACRA uses due care in the preparation of this Rating Report. Our information has been obtained from sources we consider to be reliable, but its accuracy or completeness is not guaranteed. PACRA does not, in every instance, independently verify or validate information received in the rating process or in preparing this Rating Report. (Clause 11-(A)(p))
    3. PACRA prohibits its employees and analysts from soliciting money, gifts, or favors from anyone with whom PACRA conducts business. (Chapter III; 11-A-(q))
    4. PACRA ensures before the commencement of the rating process that an analyst or employee has not had a recent employment or other significant business or personal relationship with the rated entity that may cause or may be perceived as causing a conflict of interest. (Chapter III; 11-A-(r))
    5. PACRA maintains the principle of integrity in seeking rating business. (Chapter III; 11-A-(u))
    6. PACRA promptly investigates in the event of misconduct or a breach of the policies, procedures, and controls, and takes appropriate steps to rectify any weaknesses to prevent any recurrence, along with suitable punitive action against the responsible employee(s). (Chapter III; 11-B-(m))
  4. Independence & Conflict of Interest
    1. PACRA receives compensation from the entity being rated or any third party for the rating services it offers. The receipt of this compensation has no influence on PACRA’s opinions or other analytical processes. In all instances, PACRA is committed to preserving the objectivity, integrity, and independence of its ratings. Our relationship is governed by two distinct mandates: i) rating mandate - signed with the entity being rated or issuer of the debt instrument, and ii) fee mandate - signed with the payer, which can be different from the entity.
    2. PACRA does not provide consultancy/advisory services or other services to any of its customers or their associated companies and associated undertakings that are being rated or have been rated by it during the preceding three years, unless it has an adequate mechanism in place ensuring that the provision of such services does not lead to a conflict of interest situation with its rating activities. (Chapter III; 12-2-(d))
    3. PACRA discloses that no shareholder directly or indirectly holding 10% or more of the share capital of PACRA also holds directly or indirectly 10% or more of the share capital of the entity which is subject to rating or the entity which issued the instrument subject to rating by PACRA. (Chapter III; 12-2-(f))
    4. PACRA ensures that the rating assigned to an entity or instrument is not affected by the existence of a business relationship between PACRA and the entity or any other party, or the non-existence of such a relationship. (Chapter III; 12-2-(i))
    5. PACRA ensures that the analysts or any of their family members shall not buy, sell, or engage in any transaction in any security which falls in the analyst’s area of primary analytical responsibility. This clause, however, does not apply to investments in securities through collective investment schemes. (Chapter III; 12-2-(l))
    6. PACRA has established policies and procedures governing investments and trading in securities by its employees and for monitoring the same to prevent insider trading, market manipulation, or any other market abuse. (Chapter III; 11-B-(g))
  5. Monitoring and Review
    1. PACRA monitors all the outstanding ratings continuously, and any potential change therein due to any event associated with the issuer, the security arrangement, the industry, etc., is disseminated to the market immediately and in an effective manner after appropriate consultation with the entity/issuer. (Chapter III; 17-(a))
    2. PACRA reviews all the outstanding ratings periodically on an annual basis. Provided that public dissemination of annual review and in an instance of change in rating will be made. (Chapter III; 17-(b))
    3. PACRA initiates an immediate review of the outstanding rating upon becoming aware of any information that may reasonably be expected to result in downgrading of the rating. (Chapter III; 17-(c))
    4. PACRA engages with the issuer and the debt securities trustee to remain updated on all information pertaining to the rating of the entity/instrument. (Chapter III; 17-(d))
  6. Probability of Default
    1. PACRA’s Rating Scale reflects the expectation of credit risk. The highest rating has the lowest relative likelihood of default (i.e., probability). PACRA’s transition studies capture the historical performance behavior of a specific rating notch. Transition behavior of the assigned rating can be obtained from PACRA’s Transition Study available at our website. (www.pacra.com) However, the actual transition of rating may not follow the pattern observed in the past. (Chapter III; 14-3(f)(vii))
  7. Proprietary Information
    1. All information contained herein is considered proprietary by PACRA. Hence, none of the information in this document can be copied or otherwise reproduced, stored, or disseminated in whole or in part in any form or by any means whatsoever by any person without PACRA’s prior written consent.

Mar-25

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