Lahore, July 31, 2023 (PPI-OT): The rating reflects that Jahangir Siddiqui and Co. Ltd. (‘JSCL’ or ‘the Company’) is a strong holding Company in the financial sector with significant investments in various areas. Its portfolio includes banking (JS Bank, BankIslami Pakistan), insurance (EFU Life Assurance and EFU General Insurance), brokerage (JS Global Capital), and asset management (JS Investments). JS Bank is on its path to establish itself as a medium sized bank offering innovative financial services, while BankIslami seeks to expand its presence in the growing Islamic Banking sector. On June 27, 2023, Next Capital (Pvt) Ltd., on behalf of JS Bank, submitted a public offer to acquire 24.9% shares of BankIslami. This acquisition aims to enhance JS Group’s financial presence and strengthen its position in the banking sector.
JSCL holds a significant stake in EFU General Insurance and EFU Life Assurance and plans to maintain them. After experiencing volatility in the markets for some time, JS Global and JS Investments are expected to improve their performance. JSCL is on its way to diversify its investment portfolio. It has already made significant investments in LPG storage and infrastructure, through its wholly-owned subsidiary, Energy Infrastructure Holding (Pvt.) Ltd. (EIHPL). The investments are predominantly funded by equity. JS Petroleum Ltd is en route to establishing an LPG storage terminal at Port Qasim, Karachi. The Company income stream remained stable with major portion comprised of dividend income received from EFUG and EFUL.
This along with other income and investment in derivatives supplements the revenue stream. The Company has a very strong capital structure with low leveraging of ~8.0% at 1QCY23 (CY22: ~9%), with adequate coverages. During CY23, the Company fully repaid the outstanding principal along with the accrued mark-up against its OTC listed TFC X. The final payment of TFC XI is also expected during the current calendar year. The company’s portfolio has been impacted by the overall capital market downturn. However, over the years, they have been exhibiting resilience.
The ratings are dependent on the management’s ability to execute its envisaged strategy of growth and expansion amidst the prevailing tough environment. Timely materialization of these initiatives into sustainable ventures is critical. Strong performance of subsidiaries, stable dividends, and effective management of financial profile and liquidity remains important.
For more information, contact:
Analyst,
The Pakistan Credit Rating Agency Limited (PACRA)
Awami Complex, FB1, Usman Block New Garden Town,
Lahore, Pakistan
Tel: +92-42-5869504-6
Fax: +92-42-5830425
Email: hammad.rashid@pacra.com
Website: www.pacra.com
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