MOSL: ICICI SECURITIES (Buy)-Strong performance led by MTF and the Distribution business
ICICI SECURITIES: Strong performance led by MTF and the Distribution business
(ISEC IN, Mkt Cap USD3.5b, CMP INR822, TP INR970, 18% Upside, Buy)
- ISEC delivered yet another quarter of robust performance, with revenue (INR8.6b, 26% YoY) and PAT (INR3.5b, 26% YoY) beating our estimates by 9%. The C/I ratio inched up by 70bp sequentially to 45%, led by an 11%/34% rise in employee cost/other expenses (related to marketing cost and technology investments). Employee cost-to-total income stood ~20% v/s ~23% in FY21 and 29-32% over FY18-20.
- We have raised our FY22E/FY23E EPS estimates by ~5%/4% to factor in higher than expected traction in MTF, Distribution, and Investment Banking segments. Profitability should improve over the medium term with scale benefits. We maintain our Buy rating with a TP of INR970/share (21x FY23E EPS).
Muted growth in Retail Broking revenue, customer acquisition remains strong
- ISEC added 583k new customers v/s 390k QoQ. In 2QFY22, acquisition cost amounted to INR250-300m. The cost of acquisition in the digital channel, which is a key focus area, is witnessing a declining trend on a MoM basis.
- The activation rate witnessed an improvement (300bp QoQ) to 74%. The number of NSE active clients rose to 2.8m from 1.9m QoQ.
ICICI Securities Ltd. ICICI Securities Limited is an India-based company. The Company offers a range of financial services including brokerage, financial product distribution and investment banking and focuses on both retail and institutional clients. The Company's segments include: Broking and commission is consists of its equity, currency and derivative brokerage services, the distribution of third-party products, research, and fees from financial planning/education; Advisory services, which consists of equity capital markets services and financial advisory services that cater to corporate clients, the government and financial sponsors; Investment and trading, which consists of treasury and proprietary trading activities.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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