Broker’s call: ICICI Securities (Outperform)

Target: ₹ 720

CMP: ₹ 596.50

ICICI Securities (ISEC) reported 11 per cent qoq decline in PAT, largely in line with our expectation for 14 per cent qoq decline. This was driven by lower investment banking income (as expected) and broking revenue (slight miss).

In our monthly sector notes, we have been highlighting that range-bound cash trading volumes and rising derivatives (F&O) volumes are more beneficial to discount brokers than traditional brokers.

The company gained 30bps market share in cash volumes in the quarter while its F&O market share was largely stable. With management planning to make large investments in technology and marketing, we raise our FY23-25CL cost-to-income ratio to 51 per cent +. This leads to a slight cut in FY23 / 24CL estimates.

The MTF + ESOP funding book continues to scale up – it grew from ₹ 6,600 crore to ₹ 7,200 crore qoq. However, we believe the strong growth in this book achieved over the past two years will slow down due to choppy markets and new regulations impacting ESOP funding.

Distribution income was up 3 per cent sequentially, yet 6 per cent below our estimate due to a miss on mutual fund distribution revenue.

Maintain Outperform on reasonable valuations with lower target price of ₹ 720 (16x FY24CL EPS) (₹ 750 earlier).

Published on

April 22, 2022


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