|Particulars (In Rs. Cr.)||Q2FY22||Q1FY22||Q2FY21||QoQ %||YoY%|
|Revenue from Operations||856.37||745.3||680.68||14.90%||25.81%|
|Other Expenses (incl. Fees end comm. expense)||149.05||126.84||84.85||17.51%||75.66%|
|Provisions & Write Offs||-4.51||-2.95||2.19||–||–|
|Profit After Tax||351.24||310.72||278.15||13.04%||26.28%|
|EBITDA Margin (Change in bps)||63.47%||63.13%||60.83%||34.60||264.16|
|PAT Margin (Change in bps)||41.01%||41.69%||40.86%||-0.02||15.14|
|Segment Revenue||Q2FY22||Q1FY22||Q2FY21||QoQ %||YoY%|
|Income from services||273||211||190||29.61%||43.92%|
|Net gain on fair value changes||19.92||7.46||8.46||167.02%||135.46%|
ICICI Securities Consolidated Revenue rose 14.9% QoQ and 25.81% YoY to Rs 856.37 crore.
Despite increase of 25% YoY increase in total expenditure, net profit rose 26.3% YoY to Rs 351 crore for the September quarter compared with Rs 278 crore in the same quarter last year.
The cost /income ratio inched up by 70 basis points sequentially to 45%, led by an 11%/34% rise in employee cost/other expenses (related to marketing cost and technology investments).
In Q2FY22, Equities and Allied Business, which comprises retail equity, institutional equity, lending towards ESOP (Employee Stock Option Plans) & MTF (Margin Trade Funding), Prime & NEO subscription fees and other charges, rose 19% YoY to Rs. 541 crore.
Distribution income was at Rs 151 crore, up 53% YoY. ICICI Securities’ MF revenues grew by 52% YoY to Rs. 87 crores in Q2FY22. On the back of SIP count rising 42% YoY to 0.92 million in September 2021, the company’s market share in SIP flows has expanded to 4% in Q2FY22 from 3.4% in Q2FY21. Life insurance product distribution revenues was up 92% YoY.
I-Sec’s Private Wealth Management (PWM) business reported Rs. 232 crore of revenue in Q2FY22 up 129% on-year. The PWM business is a home-grown franchise serving 61,850 High Networth and Ultra High Networth (HNI/U-HNI) clients (6,900 added during the quarter), with an asset base of Rs. 2.49 Lakh crore, up 115% year-on-year.
Has a client base of 63 lakh of which 5.8 lakh clients added in Q2FY22; up by over 400% YoY; highest ever quarterly addition. 77% of new customers coming from non ICICI Bank channels.
The company has 2.58 million active clients and 2.27 million NSE active clients, up 65% and 90% YoY respectively.
Declared Interim dividend of Rs. 11.25 per share vs Rs. 8 in Q2FY21
Commenting on the Q2 performance, Vijay Chandok, Managing Director and Chief Executive Officer, said: “Our strategy of broad basing our customer acquisition engine is paying off and I am happy to report highest ever quarterly customer addition yet again this quarter. During the quarter, younger millennials and Gen Z accounted for 65% of new customers (vs 39% a year ago) and those from tier II and below cities are now 84% of new customers (67% last year). We see a long growth runway, given our country’s current position in the financialization journey, expected secular long term GDP growth, large number of youth entering the job market annually and equally large number of retirees with both sets with differential needs.”
Continue to See growth in Equity and Distribution Businesses.
Expect More headroom for growth in insurance distribution Business.
With several initiatives in the Derivatives segment, the management expects market share improvement in the next few quarters.
Tie-up with HSBC will take some time to go live, and customer quality will be relatively better than other Banks.
MTF (Margin Trading Funding) book has been growing faster, driven by new product launches a few quarters back. ISEC’s market share in the MTF business rose to 21.8% from 17% a year ago.
ISEC aspires to reduce the C/I ratio to 40% over the medium term, primarily from operating leverage benefits. In the near term, the C/I ratio may see a marginal increase. Employee cost/revenue is likely to see a 2-3% increase in coming quarters.
Incremental market in September was at 12%
ICCI Securities reported strong growth in September quarter led by strong growth across all businesses. The company’s combined (retail + institutional) market share remained stable at 8.9% in the cash segment. The total customers having opted for NEO is 1.5 Lac. The share of NEO to total derivatives volumes is 40%. Instead of seeing it as a mere trading brokerage generator, ISEC believes its NEO customer provides it with a good opportunity for cross-selling multiple products over next the few years. It is India’s second largest non-bank MF distributor by revenue and assets. Tie-up with HDFC Life and the launch of new loan products, the traction in distribution income is expected to remain strong for the company. The C-I Ratio of the company have increased to 45%. However, with the efforts directed towards controlling fixed costs the management expects the C-I ratio to decline to sub-40% over the medium term which would add the Profitability. At the CMP of Rs. 808, ICICI Securities is trading at PE multiple of 20.7x. Valuing the company at 17x FY23E EPS, we recommend buy on ICICI Securities at CMP of Rs. 808 for the Target Price of Rs.980.
Disclosure in pursuance of Section 19 of SEBI (RA) Regulation 2014
Elite Wealth Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only information in making their investment decision and must exercise their own judgment before making any investment decision.
For analyst certification and other important disclosures, see the Disclosure Appendix, or go to www.elitewealth.in. Analysts employed by Elite Wealth Limited are registered/qualified as research analysts with SEBI in India.( SEBI Registration No.: INH100002300)
Analyst Certification (For Reports)
Israil Khan, Elite Wealth Limited, email@example.com
The analyst(s) certify that all of the views expressed in this report accurately reflect my/our personal views about the subject company or companies and its or their securities. I/We also certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. Unless otherwise stated, the individuals listed on the cover page of this report are analysts in Elite Wealth Limited.
As to each individual report referenced herein, the primary research analyst(s) named within the report individually certify, with respect to each security or issuer that the analyst covered in the report, that:
(1) all of the views expressed in the report accurately reflect his or her personal views about any and all of the subject securities or issuers; and
(2) no part of any of the research analyst’s compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed in the report.
For individual analyst certifications, please refer to the disclosure section at the end of the attached individual notes.
This note may include excerpts from previously published research. For access to the full reports, including analyst certification and important disclosures, investment thesis, valuation methodology, and risks to rating and price targets, please visit www.elitewealth.in.
Important disclosures, including price charts, are available and all Elite Wealth Limited covered companies by visiting https://www.elitewealth.in, or emailing firstname.lastname@example.org with your request. Elite Wealth Limited may screen companies based on Strategy, Technical, and Quantitative Research. For important disclosures for these companies, please e-mail email@example.com.
Options related research:
If the information contained herein regards options related research, such information is available only to persons who have received the proper option risk disclosure documents. For a copy of the risk disclosure documents, please contact your Broker’s Representative or visit the OCC’s website at https://www.elitewealth.in
All research reports made available to clients are simultaneously available on our client websites. Not all research content is redistributed, e-mailed or made available to third-party aggregators. For all research reports available on a particular stock, please contact your respective broker’s sales person.
Ownership and material conflicts of interest Disclosure
Elite Wealth Limited policy prohibits its analysts, professionals reporting to analysts from owning securities of any company in the analyst’s area of coverage. Analyst compensation: Analysts are salary based permanent employees of Elite Wealth Limited. Analyst as officer or director: Elite Wealth Limited policy prohibits its analysts, persons reporting to analysts from serving as an officer, director, board member or employee of any company in the analyst’s area of coverage.
Country Specific Disclosures
India – For private circulation only, not for sale.
Legal Entities Disclosures
Mr. Ravinder Parkash Seth is the Managing Director of Elite Wealth Ltd (EWL, henceforth), having its registered office at Casa Picasso, Golf Course Extension, Near Rajesh Pilot Chowk, Radha Swami, Sector-61, Gurgaon-122001 Haryana, is a SEBI registered Research Analyst and is regulated by Securities and Exchange Board of India. Telephone:011-43035555, Facsimile: 011-22795783 and Website: www.elitewealth.in
EWL discloses all material information about itself including its business activity, disciplinary history, the terms and conditions on which it offers research report, details of associates and such other information as is necessary to take an investment decision, including the following:
a) EWL or his associate or his relative has no financial interest in the subject company and the nature of such financial interest;
(b) EWL or its associates or relatives, have no actual/beneficial ownership of one per cent. or more in the securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance;
(c) EWL or its associate or his relative, has no other material conflict of interest at the time of publication of the research report or at the time of public appearance;
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) EWL or its associates have not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) EWL or its associates have not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(d) EWL or its associates have not received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months;
(e) EWL or its associates have not received any compensation or other benefits from the Subject Company or third party in connection with the research report.
3 In respect of Public Appearances
(a) EWL or its associates have not received any compensation from the subject company in the past twelve months;
(b) The subject company is not now or never a client during twelve months preceding the date of distribution of the research report and the types of services provided by EWL