ICICI Securities makes weak debut; ends 14% below issue price on BSE

The stock listed at Rs 431, a 17% lower against its issue price of Rs 520 per share on the BSE, while on NSE the stock opened 16% lower at Rs 435

ICICI Securities made a weak debut by listing at Rs 431, a 17% lower against its issue price of Rs 520 per share on the BSE. On the National Stock Exchange (NSE), the stock opened at Rs 435, a 16% below its offer price.

ICICI Securities ended at Rs 445, a 14% below its issue price, after hitting high of Rs 463 on the BSE in intra-day trade. A combined 8.74 million shares changed hands on the counter on the BSE and NSE, the exchange data shows.

ICICI Securities had reduced the size of its initial public offer (IPO) to Rs 35.15 billion after the sale elicited a sluggish response, especially from high networth individuals. The IPO was subscribed 0.78 times, received bids for 34.68 million shares, against offer size of 44.22 million shares, data on the stock exchanges website showed.

The qualified institutional buyers (QIBs) category of the IPO was subscribed1.04 times and retail individual investors (RIIs) category was subscribed 0.88 times and of non institutional investor’s category by 0.35 times, data showed.

The entire proceeds from the offer for sale will be paid to selling shareholder ICICI Bank. The objects of the offer are to achieve the benefits of listing the equity shares of the company on the stock exchanges. The listing of equity shares will enhance its visibility and brand image and provide liquidity to its existing shareholders.

On valuation front, at higher price band, ICICI Securities is demanding a P/E valuation of 34.7x (to its restated TTM EPS of Rs. 15), which is at a premium to the peer average. Moreover, with respect to FY18E and FY19E earnings too, it is asking a premium valuation, analyst at Choice Broking said in an IPO note.

We are of the opinion that all the positives are already being factored in and there is a limited upside potential post listing. However, considering the growing equity cult in India, its positioning in the equity market, scalable & asset light business model, strong financial & return ratios and healthy dividend payout, we assign a “Subscribe with Caution” rating to the issue, it added.

ICICI Securities is a leading technology based securities firm in India that offers a wide range of financial services including brokerage, financial product distribution and investment banking; and focuses on both retail and institutional clients.