EUR 120.00 For Business Accounts Only

MOSL: ICICI SECURITIES (Buy)-Strong performance across revenue streams

ICICI SECURITIES: Strong performance across revenue streams

(ISEC IN, Mkt Cap USD3.3b, CMP INR760, TP INR915, 20% Upside, Buy)

 

• 1QFY22 was another robust quarter for ISEC, following an overall strong FY21. PAT was up 58% YoY to INR3.04b (33% beat), driven by 36% growth in revenue (18% beat). C/I ratio inched up ~430bp sequentially to 45%, led by a 42% rise in employee costs. In our view, variable expenses were front loaded during 1QFY22. Employee cost-to-total income stood ~20% v/s ~23% in FY21 and 29-32% over FY18-20.
• Strong momentum in the capital market, coupled with a healthy deal pipeline in Investment Banking, has led us to raise our FY22E/FY23E EPS estimate by ~19%/25%. Operating leverage remains huge in this business. We maintain our Buy rating with a TP of INR915/share (21x FY23E EPS).

 

Retail Broking: Customer acquisition picks up; limited impact of phase II/III margin norms

• ISEC added 390k new customers v/s 354k QoQ. Of this, ~270k customers were added through the Digital channel initiated last year. As per the management, the scale and mix that it is focusing on will lead to lower customer acquisition cost.
• The activation rate witnessed a sharp decline (1,300bp QoQ) to 71% as customers sourced through ICICIB network were low. The number of NSE active clients increased to 1.9m from 1.6m QoQ.
• Change in equity market share (down 40bp QoQ to 9.2%) is principally reflective of the change in mix towards Institutional volumes in Jun’21. As per the management, there has been no impact on its Retail market share.