Article

ICICI Securities Ltd-Information Note

21 Mar 2018 Nikita Bhoota

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens: March 22, 2018
Issue Closes:  March 26, 2018
Face Value- Rs 5
Public Issue: ~772.50 lakh shares
Price Band: Rs 519-520
ICICI Bank Shareholders Reservation: 5% of offer size
Issue Size: ~Rs 4,017cr
Bid Lot: 28 Equity shares       
Issue Type: 100% Book Building

% shareholding

Pre IPO

Promoter

100.0

Public

-

Source: RHP

Company Background

ICICI Securities Ltd (ISec) is a leading technology based securities service firm in India that offers a wide range of financial services to retail and institutional clients. As per CRISIL, ISec has been the largest equity broker in India since FY2014 in terms of brokerage revenue and active customers in equities on the National Stock Exchange. As per 9MFY18 consolidated revenues, the principal businesses of the company involve: Broking and commission (90.1%), Advisory services (8.4%) and Investment & trading (1.5%). ISec has a pan India network of 200 own branches, ~2,600 ICICI Bank branches (through which ISec’s platform is marketed) and ~4,600 sub-brokers.

Offer Details

The offer consists of an Offer for Sale (OFS) of up to ~772.50 lakh equity shares.

Financials

 

Consolidated Rs Cr.

FY15

FY16

FY17

9MFY18*

Revenue from operations

1,210

1,125

1,404

1,345

Growth (%) yoy

48.9

(7)

24.9

31.5

EBITDA

497

416

566

659

EBITDA margin (%)

41.1

37.0

40.3

49.0

Reported PAT

294

239

339

399

EPS ‐ Diluted (`)

9.1

7.4

10.5

12.4

RoNW (%)

99.6

64.7

77.5

-

Source: Company,5paisaresearch*9MFY18 figures are not annualized

Key Points

  1. As per CRISIL, in terms of brokerage revenue and active customers in in equities on the National Stock Exchange, ISec has been the largest equity broker in India since FY14. Retail customers accounted for 91.9%, 90.5% and 89.1% of the revenue from brokerage business in FY16, FY17 and 9MFY18 respectively. ICICIDirect, ISec’s electronic brokerage platform had ~3.9mn customers as on December 31, 2017. The electronic brokerage platform is backed by robust infrastructure and has processed ~1.9mn orders and trades in a day.
  2. ISec is the leading investment bank in the Indian equity capital markets by number of equity capital market issuances managed during the period April 1, 2012 to September 30, 2017 (CRISIL). The company’s equity capital markets services include management of public equity offerings, rights issues, share buybacks, tender offers, de-listings, and private equity placements. It also provides domestic and foreign institutional investors with cash equity and equity derivative brokerage services, corporate access and equity research.

Key Risk

Brokerage business constituted 65.6%, 62.6% and 63.6% share of the consolidated revenues in FY16, FY17 and 9MFY18 respectively. This segment depends on trading volume, which is significantly affected by external factors like general economic conditions, macro-economic & monetary policies and overall market conditions. Brokerage fee levels are primarily driven by competition, as there is constant pressure to lower the brokerage fee in the securities industry.      

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ICICI Securities Ltd-Information Note

21 Mar 2018 Nikita Bhoota

This document summarizes a few key points related to the issue and should not be treated as a comprehensive summary. Investors are requested to refer the Red Herring Prospectus for further details regarding the issue, the issuer company and the risk factors before taking any investment decision. Please note that investment in securities is subject to risks including loss of principal amount and past performance is not indicative of future performance. Nothing herein constitutes an offer of securities for sale in any jurisdiction where it is unlawful to do so.

This document is not intended to be an advertisement and does not constitute an invitation or form any part of any issue for sale or solicitation of an offer to subscribe for or purchase any securities and neither this document nor anything contained herein shall form the basis for any contract or commitment whatsoever.

Issue Opens: March 22, 2018
Issue Closes:  March 26, 2018
Face Value- Rs 5
Public Issue: ~772.50 lakh shares
Price Band: Rs 519-520
ICICI Bank Shareholders Reservation: 5% of offer size
Issue Size: ~Rs 4,017cr
Bid Lot: 28 Equity shares       
Issue Type: 100% Book Building

% shareholding

Pre IPO

Promoter

100.0

Public

-

Source: RHP

Company Background

ICICI Securities Ltd (ISec) is a leading technology based securities service firm in India that offers a wide range of financial services to retail and institutional clients. As per CRISIL, ISec has been the largest equity broker in India since FY2014 in terms of brokerage revenue and active customers in equities on the National Stock Exchange. As per 9MFY18 consolidated revenues, the principal businesses of the company involve: Broking and commission (90.1%), Advisory services (8.4%) and Investment & trading (1.5%). ISec has a pan India network of 200 own branches, ~2,600 ICICI Bank branches (through which ISec’s platform is marketed) and ~4,600 sub-brokers.

Offer Details

The offer consists of an Offer for Sale (OFS) of up to ~772.50 lakh equity shares.

Financials

 

Consolidated Rs Cr.

FY15

FY16

FY17

9MFY18*

Revenue from operations

1,210

1,125

1,404

1,345

Growth (%) yoy

48.9

(7)

24.9

31.5

EBITDA

497

416

566

659

EBITDA margin (%)

41.1

37.0

40.3

49.0

Reported PAT

294

239

339

399

EPS ‐ Diluted (`)

9.1

7.4

10.5

12.4

RoNW (%)

99.6

64.7

77.5

-

Source: Company,5paisaresearch*9MFY18 figures are not annualized

Key Points

  1. As per CRISIL, in terms of brokerage revenue and active customers in in equities on the National Stock Exchange, ISec has been the largest equity broker in India since FY14. Retail customers accounted for 91.9%, 90.5% and 89.1% of the revenue from brokerage business in FY16, FY17 and 9MFY18 respectively. ICICIDirect, ISec’s electronic brokerage platform had ~3.9mn customers as on December 31, 2017. The electronic brokerage platform is backed by robust infrastructure and has processed ~1.9mn orders and trades in a day.
  2. ISec is the leading investment bank in the Indian equity capital markets by number of equity capital market issuances managed during the period April 1, 2012 to September 30, 2017 (CRISIL). The company’s equity capital markets services include management of public equity offerings, rights issues, share buybacks, tender offers, de-listings, and private equity placements. It also provides domestic and foreign institutional investors with cash equity and equity derivative brokerage services, corporate access and equity research.

Key Risk

Brokerage business constituted 65.6%, 62.6% and 63.6% share of the consolidated revenues in FY16, FY17 and 9MFY18 respectively. This segment depends on trading volume, which is significantly affected by external factors like general economic conditions, macro-economic & monetary policies and overall market conditions. Brokerage fee levels are primarily driven by competition, as there is constant pressure to lower the brokerage fee in the securities industry.      

Research Disclaimer