ICICI securities is India's one of the leading Equity house in the country providing end to end services
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- About the Company
- Journey Since Inception
- Executive Management of ICICI Securities Limited
- Shareholding Pattern of the Company
- Business of ICICI Securities Ltd.
- Revenue Segmentation
- Cost Structure
- Subsidiaries of ICICI Securities
- Market Share
- Client Base of ICICI-Securities
- Operational Parameters
- Financial Parameters
- Management Discussion & Concall Highlights
- Strengths
- Weakness
(A) About the Company
ICICI Securities Limited is a subsidiary company of ICICI Bank Ltd.
It is one of the leading investment bank in the domestic equity capital markets and has been instrumental in pioneering numerous innovative practices in the investment banking space.
In Addition, The Company's operation began in May 1995 and continues to grow its operation by expanding its client base and providing different types of services.
ICICI Sec registered with the Securities and Exchange Board of India (SEBI) as a Stock Broker, Merchant Banker, Portfolio Manager, Investment Advisor, and Research Analyst.
It is also registered as a Corporate Agent with the Insurance Regulatory and Development Authority of India (IRDAI).
About the Group Company
ICICI Bank Limited is an Indian multinational bank and financial services company with its corporate office in Mumbai, Maharashtra.
Furthermore, It offers a wide range of banking products and financial services for corporate and retail customers through a variety of delivery channels.
however, the bank has a network of 5,266 branches and 14,136 ATMs across India and has a presence in 17 countries.
As per the Market Cap ICICI Bank is the 2nd Largest bank under the Indian Banking Industry sector.
(B) Journey Since Inception
(C) Executive Management of ICICI Securities Limited
(i) Mr Vinod Kumar Dhall - Chairman & Independent Director
Mr. Vinod Kumar Dhall is the Independent Director and Chairman of the Board of Directors of the Company
He has long experience in economic and industrial matters and regulatory experience including as a member of SEBI, and in Insurance.
As Chairman/CEO of public sector companies, he has direct commercial experience.
Moreover, Mr Dhall worked overseas with United Nations organizations.
Mr Vinod Kumar Dhall received a sitting fees in the FY21 was Rs 11 Lacs.
(ii) Mr Vijay Chandok - MD & CEO
Mr Vijay Chandok is the Managing Director and Chief Executive Officer of ICICI Securities Ltd since May 2019.
He has been with the ICICI Group for over 27 years. Prior to his current assignment, he served as the Executive Director on the Board of ICICI Bank.
Additionally, he also served as a Director on the Boards of ICICI Bank UK PLC Ltd, ICICI Bank Canada Ltd, ICICI Bank (Eurasia) Limited, and was the Chairman of ICICI Investment Management Company Limited.
During his years at ICICI Bank, he was responsible for International Banking, Small and Medium Enterprises (SME) businesses, Global Markets, and Commercial Banking Businesses.
Moreover, he also served the bank in the Retail banking group, Rural and Agri group, and Corporate banking group over the years.
Remuneration received by Mr Vinod Kumar Dhall in the FY21 was Rs 2.36 Crores, being 0.09% of Net Sales and 0.22% of Net Profit.
(iii) Mr Ajay Saraf - Executive Director
Mr. Ajay Saraf is the Executive Director of the Company.
He is a member of the Institute of Chartered Accountants of India (ICAI) and the Institute of Cost and Works Accountants of India (ICWAI).
Currently, he heads the investment banking and institutional broking divisions at the Company.
Further, he worked with ICICI Bank Ltd for approximately nine years in corporate banking and SME banking verticals. However, Prior to ICICI Bank Ltd, he worked with American Express Bank Ltd.
He has over 25 years of experience and has been associated with the Company for over 8 years.
Remuneration received byMr Ajay Saraf in the FY21 was Rs 94.93 Lacs, being 0.03% of Net Sales and 0.08% of Net Profit.
(D) Shareholding Pattern of ICICI Securities
(E) Business of ICICI Securities Ltd.
(i) Retail
ICICI Securities offers all investment and trading solutions across asset classes to retail investors through their comprehensive platform and a bouquet of digital properties.
Although, ICICI empowers the individual to take complete control of his investments and offer the entire basket of investment options by giving him a democratic medium of investment with a seamless structure that integrates user's bank account, Demat account and the trading account.
(ii) Institutional Equity
ICICI Securities offers domestic and international institutional clients brokerage services and is impaneled with a large cross-section of institutional clients. They also work with trade aggregators.
Additionally, It also provide solutions like block deals, which provide liquidity and enable them to trade on Indian stock exchanges as per their specific requirements.
Further, ICICI Sec associated with many listed companies to hold and manage Investor meetings with Board members of every companies.
In addition, It also provides services of Equity Research, under which it provides detailed Analysis Research Report for a stock by curating all information and data of a Particular company.
(iii) Financial Products Distribution
ICICI Sec is India's major distribution franchise, and being the 2nd largest non-bank mutual fund distributor.
The Company's distribution business consists of the distribution of financial products and services offered by third-parties to its customers. However, these products include mutual funds, life, medical and general insurance, corporate and bank fixed deposits, loans, tax services, AIF, PMS, SGBs, NPS, etc.
Apart from that, Company has network of nearly 172 ICICI Direct offices in almost 70 countries, Also it has network of more than 9400 of subbrokers, authorised persons, Independent Financial Associates.
(iv) Private Wealth Management
The Wealth Management Group is a team of specialists who offer specific advisory services to meet both personal and business wealth requirements of HNIs.
The team creates customized strategies to meet Customer's investment goals of wealth accumulation, wealth preservation and liquidity.
In Addition, ICICI Sec offers alternate investment avenues of private equity, such as Customized or Strategic products for the large investors.
ICICI Securities services High Networth clients by providing innovative products and solutions across their investment, business, and allied needs.
(v) Corporate Finance
The Company's investment banking business consists of equity capital market services and financial advisory services that cater to corporate clients, government, and financial sponsors.
Although, The Company is familiar with its clients' business models and the financial solutions are tailored to meet their needs.
Additionally, it has a strong team ~60 of corporate finance that helps the Company in providing a complete suite of ECM, Debt Capital Market (DCM), Mergers & Acquisition (M&A), advisory, private equity advisory services etc to its clients.
New Launches
(i) ICICI NEO
Under Trading segment, company has introduced "ICICI NEO". Its a service that offers discount brokerage or zero brokerage in futures, and Rs 20 in Options and Intraday/order.
(ii) I-Alert
During FY21, The Company launched "iAlert" service, Its an automated alert mechanism on ICICI direct platform to help investors gauge the risk associated with the stocks that they choose to buy.
The mechanism will prompt the customers when they initiate purchase of stocks with weak fundamentals so that they are aware of the risks associated.
(iii) Smart Beta
Smart beta offers portfolios curated by ICICIdirect Research team
(iv) 5 Strategic Key Anchors where it is focusing
ICICI-Sec is focusing on to become a comprehensive fintech solutions provider by meeting retail Indians’ life cycle needs in a digital and open format.
(F) Revenue Breakup of the company
(a) Segment wise Revenue Mix
ICICI-Sec Major revenue comes from brokerage and commission services income that contributes approximately 90%. On the other hand, Advisory services and Investment & Trading comprises 9-10% for the revenue.
(b) Contribution of Revenue (QoQ Basis)
Updates from Quarter4 of FY22
Company witnessed a 9% YoY decline in revenue from the Retail Broking segment. Due to Implementation of new margin norms circulated by SEBI, Company observed traction in the Trading due to Lower Leverages while trading.
On the other hand, Allied Business ( Allied Business includes ESOP & MTF interest income, Prime fees and other fees and charges) Improved in Q4 by 2% against Q3 of FY22, whereas on YoY basis it grew by 10%.
Similarly, Distribution business also reported positive growth on QoQ Basis of 2% led by Scaling in the Mutual Fund, PMS services and Insurance Business.
(c) Revenue Mix By Age Group
66% of customers acquired in Q4-FY22 are more than 30 years of age, 85% from tier II & III cities.
Additionally, During FY15 - FY22 60% of revenue in each Year has been contributed by >5 year vintage customers (which are Based on retail broking revenues)
(G) Cost Structure
ICICI Securities major cost is employee expenses which were 22.73% of net sales for FY21. After that, operating and establishment expense which were 9.69% of Net sales for FY21
(H) Subsidiaries of ICICI Securities
The Company has a 100% owned subsidiary ICICI Securities Holdings, Inc., and a step-down subsidiary ICICI Securities Inc.
Furthermore, ICICI Securities Holding Inc is the holding company of indirect subsidiary of ICICI Securities Inc., which through its offices in the US and Singapore, is engaged in referring foreign institutional clients to use for transactions on the Indian stock exchanges
(I) Market Share
ICICI Securities Ltd Market share Fell by 0.50% during last six month.
Further, Upstox (RKSV Securities) and Groww (Next Billion Technologies) have been climbing the ranks fastly compared to the other stock brokers.
In Last Quarter Upstox Recorded gain in the market share of almost 3.14% reaching to 14.47% from 11.33%.
Zerodha has much simpler and transparent pricing. Zerodha offers brokerage-free equity and mutual fund investment. ICICI Direct charges 0.55% brokerage for equity delivery. Zerodha call and trade charges are Rs 20 per trade while ICICI Direct charges Rs 50.
ICICIDirect is a Full-Service Broker whereas Upstox is a Discount Broker. Further It is having overall lower rating compare to Upstox. ICICIDirect is rated only 4 out of 5 whereas Upstox is rated 4.5 out of 5
Moreover, ICICI direct is a Full-Service Broker. It offers trading at BSE, NSE. It has 154 branches across India. Incorporated in 1987, Angel Broking is a Discount Broker. It offers trading at BSE, NSE, MCX, NCDEX. It has 900 branches across India.
The brokerage of Groww ranges between Rs 20. ICICIDirect is a Full-Service Broker whereas Groww is a Discount Broker. The overall rating for both the brokers is equal with a rating of 4 out of 5.
Additionally, Company reported ~ 7% market share in demat accounts
(J) Client Base of ICICI Securities
(i) New Clients Acquired
In Q4FY22, 66% of customers acquired are more than 30 years of age, 85% from tier II & III cities
Digital sourcing helped in the scaling of new client acquisition
(ii) Active Client Base
I-SEC focus on micro-segmenting its client base by providing a personalized experience using analytics, new-age tools, etc. It helped the company to increase its cross-sell ratios which led to expansion in overall active customer base
(K) Operational Parameters
(i) Employee Cost
ICICI Securities is constantly reducing its employee cost as % of net sales which is a positive sign towards growth.
(ii) Administration & Other Expense
ICICI Securities has good control over the Administration and other expenses which reduced from 12.10% to 4.91% as % of net sales.
(K) Financial Parameters
Over the year operating income grew at CAGR 18% p.a.
instance, PAT has been recorded at robust digits with CAGR 42% p.a. from FY14 to FY21.
Additionally, The PAT Margin Increased sharply and strongly. In FY21, company recorded 41.29% of PAT margin compare to 11.18% in FY14.
(a) Quarters on Quarters performance
(b) Annual Performance (YOY) (Rupees in Crores)
ICICI-Sec reported strong growth in the Revenue as well as in the PAT against Previous Year. Revenue grew by 32.81%, and PAT grew by 29.49%.
However, PAT Margin declined.
(L) Management Discussion and Concall Highlights
Management Discussion
Company has build a strong presence in the space of Distributing multiple financial products, to each n everyone from retail to corporates.,
The company Omni channel strategy is shifting from RM Led assistant to Completely digitally assistance.
Moreover, ICICI-Sec is more focused towards investing into tech capabilities like CRM capabilities, cyber security, capacity enhancement, AI/ML tools, UI/UX interfaces.
Likewise, I-Sec will bring T+5 which is in the making, The company will be able to offer better leverage because it's only a five days product
As per IMF, India is expected to be the fastest-growing economy in the world for CY2021 at 12.5%. Structural reforms and pro-growth policies of the Government have the potential to extend the growth momentum for India beyond CY2021.
Additionally, the direct equity investments gained popularity, as indicated by a number of Demat accounts opened.
Despite, that the managed products saw muted investor interest with preference being towards passive investment options like Exchange-traded funds, which as a category saw growth in FY2021 over FY2020.
The retail and other contributions increased in equity from 55% in FY2020 to 58% in FY2021
Concall Highlights
- In Q3FY22, Revenues came at ₹941 crores against ₹867 crores in Q2FY22, marking a QoQ growth of 8.53%.
- Moreover, In Q3 the Total AUM of the company jumped by 13.75% from ₹2,486 to ₹2,828.
1. Segmental Performance for the quarter
- Retail Equities and allied segment grew by 6% QoQ
- Distribution segment grew by 10% QoQ
- Institutional equities and allied segment grew by +9% QoQ
- Issuer services and advisory segment grew by +52% QoQ and
- Private Wealth Management segment grew by 12% QoQ
2. Overall Performance
- Digital transformation has helped the company to gain the scale of younger clients with 68% of new clients coming in at an age of 30 or below and over 87% of new clients coming from tier-II and tier-III cities.
- Advisory service revenue registered strong growth and I-Sec became the first Indian lead manager to top the equity deal table. Moreover, Today the company has nearly 145 branches.
- I-Sec's market share in the stock of Demat accounts is about 9%.
- NEO has about 150,000 odd subscribers at present. whereas, Prime has about 865,000 subscribers But on an incremental basis, it's a combination.
- NEO is clocking around 40% of the overall derivatives volume.
- I-Sec has transformed MTF in the last two years and have created an entire ecosystem for MTF customers, right from the proposition (coupled with the Prime & Prepaid), attractive interest & broking rates, supported by its strong research team.
(M) Strengths
(i) Well established brand name
Since 1995, the company has seen various capital market cycles and has a stronghold in the capital market space.
‘ICICI Securities’ is a well-established brand among retail and institutional investors in India.
The company has been able to leverage its brand awareness to grow its businesses, build relationships and attract and retain talented individuals.
The top management team comprises qualified and experienced professionals, with a successful track record
(ii) Well diversified business
The broad range of offerings under Broking, Institutional Equities, Wealth Management, Corporate Finance Advisory, and various product distribution businesses help to foresee client requirements and provide full-fledged services under a single platform.
This extensive network provides opportunities to cross-sell products and services, particularly as the company diversifies into new business streams.
(iii) Focus on digital capabilities and cost-efficiency
As a part of its long-term strategy, ISEC has built a robust technology platform that can handle large concurrent volumes on heavy trading days.
The platform was able to handle a peak volume of about 4 m+ orders on a single day while handling 95k+ concurrent users.
Further, ISEC is also focused on open architecture to on-board fintech partners in a bid to provide customer-centric solutions.
(N) Weakness
(i) Volatility in Capital Market
The capital market has an inherent risk of volatility. Market volatility (especially downward) has a high correlation with volumes growth for the broking business. So any prolonged period of negative returns from the equity market can hurt a company’s revenues hard.
(ii) Competitive Market
The capital market has an inherent risk of volatility. Market volatility (especially downward) has a high correlation with volumes growth for the broking business. So, any prolonged period of negative returns from the equity market can hurt a company’s revenues hard.
(iii) Depends upon regulations
Any adverse change of regulation might impact the business growth of the company.
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