ICICI Securities gains after Q1 PAT spurts 70%

ICICI Securities rose 2.93% to Rs 545 after consolidated net profit surged 69.7% to Rs 193.08 crore on 35.9% jump in total income to Rs 546.40 crore in Q1 June 2020 over Q1 June 2019.

The revenue was aided by strong growth in equities & allied business. The profit was boosted by growth in revenue, improvement in margins and changes in statutory tax rates. Profit before tax (PBT) soared 47.4% to Rs 259.39 crore in Q1 June 2020 as against Rs 176 crore in Q1 June 2019. Current tax expense for the quarter gained 27% at Rs 69.38 crore as against Rs 54.63 crore in Q1 June 2019. The result was announced post trading hours yesterday, 22 July 2020.

I-Sec has a client base of 4.9 million, of which about over 80,000 were added during the quarter. I-Sec has moved to completely digital account opening process from mid-April and the run rate for new account opening has been steadily increasing with the June 2020 numbers being higher than June 2019 numbers. The company has over 1.5 million active clients (those having traded in the last 12 months) and over 1.1 million NSE active clients (those having traded on the NSE in the last 12 months), up 15% and 27% YoY respectively.

In Q1FY2021, I-Sec expanded its equity market share by 260bps YoY to 10.7%, with its equity ADTO (average daily turnover) increasing by 115% versus 62% for the market. Similarly, its derivatives market share went up 150 bps YoY to 8.9%, and I-Sec derivative ADTO rose 32% vs 9% for the market.

The company has a network of 171 ICICI direct branches (vs 192in Q1FY20) and a nationwide network of business partners, consisting of sub-brokers, authorized persons, IFAs & IAs, which grew by 62% to 12,100+.

Commenting on the Q1 earnings, Vijay Chandok, the managing director (MD) and chief executive officer (CEO), has stated that: "We had an eventful quarter in which we saw increased market participation by all players -retail, HNIs and institutional, resulting in strong growth in our core equities, as well as wealth and investment banking business. Our distribution business was however soft as sentiments remained weak in debt funds and SIP inflows slowed down with investors preferring to conserve cash during these uncertain times."

"The quarter tested the resilient nature of our business model. We remain committed to transform ourselves into a financial supermarket of choice for our customers to meet their life stage needs, delivering financial products and solutions digitally. In the context of current pandemic, our stated strategy is all the more relevant with a special focus to increase digitisation, lower cost, enhance investment in technology, and fortifying our talent pool. Our business model is characterized by low credit risk and negligible inventory or supply chain risk. In the current environment, investors are looking at sound advice, trusted partner, and a reliable platform, and I-Sec scores high on all these. We will soon be adding the option of investing in US securities on icicidirect," he further added.

The board on 7 May 2020 had proposed a final dividend of Rs 6.75 per equity share. ICICI Securities offers a range of financial services including brokerage, financial product distribution and investment banking and focuses on both retail and institutional clients.

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