The Board of Directors of the second largest private lender, ICICI Bank Limited, is scheduled to meet for a board meeting on Thursday, June 29, 2023, to consider a proposal for delisting equity shares of ICICI Securities Limited, a listed subsidiary of the Bank. ICICI Bank holds a 74.85% stake in ICICI Securities, with a current market capitalization of Rs 18,207.04 crore.
Following the proposal's announcement, on June 26, the ICICI security script made a 15% gap opening at Rs. 647 a piece.
ICICI Securities Ltd is an integrated technology-based securities firm offering a range of financial services, including retail and institutional broking, financial product distribution, research, private wealth management, and issuer and advisory services. The company provides retail brokerage and financial product distribution services through its ICICI direct platform. ICICI Securities also distributes third-party products, such as mutual funds, insurance products, fixed deposits, loans, tax services, and pension products. The company has launched various services, including financial planning, equity portfolio advisory, access to alternate investments, retirement planning, and estate planning. ICICI Securities Limited has two subsidiaries, ICICI Securities, Inc. and ICICI Securities Holdings, Inc., and has expanded its distribution of loan products.
Earlier in 2018, the promoter, i.e., ICICI Bank, floated Rs. 4000 crore to list its brokerage business on the bourses and the stock on April 4, 2018. The stock was listed amid poor response from investors, and since then, the stock has mostly underperformed benchmark indices. The decision to delist comes five years after the brokerage firm debuted on the exchange.
There is news in the media that the promoter may consider its delisting proposal through a share swap instead of a cash payout, according to people with knowledge of the matter.
In Q4, ICICI Securities reported a consolidated net profit of Rs 263 crore for the quarter ended March, down 23 percent as against Rs 340 crore reported in the corresponding period of last year. Likewise, the consolidated revenue has seen a fall from the same quarter last year, which was Rs. 885 crore in March 2023 compared to Rs. 892 crore in March 2022.
Q-o-Q total income has risen marginally from Rs. 878 in the December quarter to Rs. 885 in the March quarter, but the overall net profit has noticed a fall of 6.5% to Rs. 262.68 cr. The company's cost-to-income ratio has risen from 39% in 2021 to 45% in 2023, according to the Q4 investor presentation.
Year-on-Year revenue composition of brokerage business has seen a drastic change; overall revenue from cash broking business has fallen from 31% to just 20%, the derivative brokerage has increased from 11% to 15% this recent quarter, Allied revenue has increased marginally to 26%, distribution business has seen a rise of 3% to 22%, issuer services has fallen from 7% to 1% in Q4 of 2023.
ICCI securities, over the years since listing on the stock exchange, have given a net return in stock appreciation of 40%.
At the time of publishing article ICICI securities was up 10% at Rs. 619 and ICICI bank was up 0.40% at Rs. 927.
|P&L||FY 2023||FY 2022||FY 2021||FY 2020||FY 2019|
|Total Revenue Growth (%)||-0.38||32.96||49.93||-0.12||-7.2|
|Total Expenses Growth (%)||21.36||37.25||18.87||0.23||-3.85|
|Profit after Tax (PAT)||1,117.63||1,382.60||1,067.72||542||490.73|
|PAT Growth (%)||-19.16||29.49||97||10.45||-11.34|
|Operating Profit Margin (%)||59.64||61.9||59.47||49.19||46.9|
|Net Profit Margin (%)||32.71||40.25||41.28||31.76||28.78|