First Capital Treasuries PLC (FCT), the Group’s prominent subsidiary engaged in primary dealer activities, remains the majority contributor to FCH’s business profile. The performance of primary dealers is expected to normalize as interest rates stabilize and are expected to increase given current operating environment. However, the performance mix of subsidiaries has become diversified, with First Capital Limited emerging as a key contributor during 9MFY26, supported by the dealing securities division. This has increased the Group's exposure to equity market. The Group recorded trading gains on equity investments during the period. The wealth management and stockbroking divisions also reported profits during the period, further supporting the Group’s overall performance. The rating also takes into account a slight improvement in the asset quality of the Company's investment portfolio, supported by better credit profiles of certain core investments, including Janashakthi Insurance, during the period.
FCH maintains a diversified funding base across debentures, commercial papers, and bank borrowings. The Company's maintains and leveraged capital structure with leveraging increasing to ~63.7% in 9MFY26 (FY25: ~57.4%). The Company was also able to contain its exposure to related-party receivables during the period. The listing of parent company (Janashakthi Limited) is expected to reduce group funding requirements to an extent.
The rating is dependent on the Company's ability to maintain its strong market position and performance in the evolving macroeconomic environment. Sound financial discipline, including strong capitalization, managed leverage, controlled related-party exposure, and sustained debt repayment capacity, remains imperative. Continued strong performance of subsidiaries, particularly FCT, will be a critical rating factor, going forward.