Press Release

VIS Reaffirms Entity Ratings of Taurus Securities Limited

Karachi, December 3, 2019: VIS Credit Rating Company Ltd. has reaffirmed the entity ratings of Taurus Securities Limited (TSL) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’. The long term rating of ‘A’ signifies good credit quality with adequate protection factors. Risk may vary slightly from time to time because of economic conditions. Short term rating of ‘A-2’ depicts good certainty of timely payment where liquidity factors are sound and good access to capital markets. Previous rating action was announced on December 31, 2018.

The assigned ratings continue to derive strength from robust profile of TSL’s sponsors including National Bank of Pakistan (NBP), a state owned entity and one of the largest commercial banks in the country, along with manageable leverage and liquidity indicators. TSL also benefits from a funding line from its parent. However, ratings are constrained by weakening in brokerage sector outlook, declining value & volume of shares traded and resultant pressure on TSL’s profitability profile & capitalization levels.

Performance of Pakistani equity market has remained dismal over the past two fiscal years with dwindling trading volumes largely owing to economic slow-down, increasing interest rate environment and aggressive foreign selling. Given tough market conditions, players with efficient and variable cost structure along with diversified revenue streams managed to remain profitable. Going forward, focus of brokerage companies is expected to remain on cost rationalization, revenue diversification and focus on higher margin business. Nevertheless, brokerage sector outlook is expected to remain challenging; impact of recently revised brokerage commission structure for all security brokers and recent uptick in market volumes on TSL’s profitability would be tracked by VIS.

Over the last two fiscal years, trend in TSL’s operating losses has persisted. Despite reduction in administrative expenses, annualized operating losses more than doubled during 9M2019 vis-à-vis outgoing year, as significant downtick in the stock market contributed to lower commissions. Nonetheless, the company was able to maintain its market share in ongoing year. Management has undertaken various cost control measures and expects that, coupled with projected growth in revenues; the downward trend in operating performance will be arrested. Realization of projected financial indicators will be monitored by VIS in the coming years.

For further information on this rating announcement, please contact Mr. Muhammad Ibad Desmukh (Ext: 205) or the undersigned (Ext: 207) at (021) 35311861-66 or email at

Jamal Abbas Zaidi

Applicable Rating Criteria: Methodology - Brokerage Firms Rating (March 2019)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited (VIS) does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS , the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2019 VIS Credit Rating Company Limited . All rights reserved. Contents may be used by news media with credit to VIS .

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