ICICI Securities IPO comprises saleof 7,72,49,508 shares. ICICI Securities offers a wide range of financial Services including investment banking, institutional broking, retail broking, private wealth management, and financial product distribution.
ICICI Securities has been the largest equity broker in India since fiscal 2014 in terms of brokerage revenue,
ICICI Securities Limited IPO Details
| Issue Period | March 22, 2018-March 25, 2018 |
| Issue Details | Offer for Sale of 77,249,508 Equity Shares |
| Issue Size (Rs. Cr) | 4,017 Cr |
| ICICI Bank Shareholders Reservation | 3,862,475 Equity Shares – 201 Cr |
| Price Band | Rs.519 – 520 |
| Bid Lot | 28 Equity Shares and multiple thereof |
| Issue Structure : | |
| QIB | 75% of the Net offer |
| NIB | 15% of the Net offer |
| Retail | 10% of the Net offer – 7,338,703 Equity Shares- 382 Cr |
| Applications for 1x retail subscription | 2,62,097 |
| BRLMs | DSP Merill Lynch, Citigroup Global, CLSA India, Edelweiss Financial, IIFL Holdings, SBI Capital Markets |
| Registrar | Karvy Computershare Pvt. Ltd.. |
About ICICI Securities Limited
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ICICI Securities Ltd is a technology-based firm offering a wide range of financial services including investment banking, institutional broking, retail broking, private wealth management, and financial product distribution.
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ICICI Securities aims in ‘Creating Informed Access to the Wealth of the Nation‘ for its diversified set of clients that include corporates, financial institutions, high net-worth individuals and retail investors.
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Headquartered in Mumbai, ICICI Securities operates out of 75 cities in India and wholly owned indirect subsidiaries in Singapore and New York.
- Its retail brokerage and distribution businesses are aided by a nationwide network, consisting of over 200 owned branches, over 2,600 branches of ICICI Bank through which electronic brokerage platform is marketed and over 4,600 sub-brokers, authorized persons, independent financial associates and independent associates as at December 31, 2017.
ICICI Securities Limited: Financials:
| Rs. In crore | |||||
| Particulars | 2017(9) | 2016(9) | Fy17 | Fy16 | Fy15 |
| Revenue from Operations | 1,344.69 | 1,022.69 | 1,404.23 | 1,124.58 | 1,209.51 |
| Revenue Growth (%) | 31.49% | – | 24.87% | -7.02% | – |
| Profit Before Tax | 612.57 | 394.65 | 522.04 | 374.1 | 449.68 |
| Profit after Tax | 399.09 | 255.41 | 338.59 | 238.72 | 293.87 |
| Net Profit as % to Revenue | 29.68% | 24.97% | 24.11% | 21.23% | 24.30% |
| EPS (Rs.) | 12.39^ | 7.93^ | 10.51 | 7.41 | 9.12 |
| Share Capital | 161.07 | 161.07 | 161.07 | 161.07 | 161.07 |
| Reserves | 514.05 | 300.37 | 328.51 | 237.09 | 191.24 |
| Net worth as stated | 668.81 | 422.58 | 482.97 | 391.15 | 346.29 |
| Long Term Borrowings | 84.56 | 69.11 | 82.65 | 62.75 | 52.5 |
| Short Term Borrowings | 860.71 | 492.98 | 395.41 | 172.86 | 226.53 |
| RONW(%) as stated | 69.30% | 60.44% | 77.47% | 64.74% | 99.59% |
| Net Asset Value (Rs.) | 20.76 | 14.09 | |||
| IPO Price | 520 | ||||
| Face Value | 5 | ||||
| EPS (Fy17) | 10.51 | ||||
| PE – (fy17 Earnings) | 49.47 | ||||
| CAGR Sales 3 Yrs | 23.24% | ||||
| CAGR Net Profit 3 Yrs | 56.00% | ||||
| Market Cap | 16751.28 | crore | |||
| Market cap / Sales | 11.93 | ||||
Rationale for Investment
- ICICIdirect platform provide the customers with a seamless settlement process through a 3-in-1 account, which links the electronic brokerage platform with customers’ savings bank and dematerialised accounts held with ICICI Bank.
- ICICI Securities Limited is the largest equity broker in India.
- ICICI Securities Limited has a strong distribution business, where they distribute various mutual funds, insurance products,FDs of select companies, loans and pension products to retail customers. This is source of considerable commission income to the company. In 2017, revenues from the
distribution of third party mutual funds accounted to 47.3% of its revenue - ICICDirect offers a Superior customer experience through product and technology innovation
- Company has exhibited a strong financial performance with significant operating efficiency
Risks & Concerns:
- Continuous downtrend in equity capital market can dent ICICI Securities Limited profitability.
- Increased Competition is likely to result in pricing pressures
- ICICI Securities Limited has been facing rise in operating expenses.
Peer Comparison:
| Peer Group Comparison (Rs. in Crore) | ||||
| Particulars/ Company | ICICI Sec | Motilal | IIFL | JM |
| Net Sales | 1,404.23 | 1,726.19 | 4,912.47 | 2,359.26 |
| PAT | 338.59 | 359.97 | 686.09 | 470.2 |
| Equity | 161.07 | 14.45 | 63.58 | 79.45 |
| Market /IPO Price | 520 | 1,040.65 | 612.2 | 119 |
| Face Value | 5 | 1 | 2 | 1 |
| EPS | 10.51 | 24.91 | 21.58 | 5.92 |
| Price / Earning | 49.47 | 41.77 | 28.37 | 20.11 |
| NPM % | 24.11% | 20.85% | 13.97% | 19.93% |
| Market Cap | 16751 | 15037 | 19462 | 9455 |
| Market Cap/Sales | 11.93 | 8.71 | 3.96 | 4.01 |
ICICI Securities Limited appears to be priced at a premium to peers. Further ICICI’s asset management business is housed as a different subsidiary, whereas others like Motilal Oswal, edelweiss have this as part of their company.
ICICI Securities IPO: Assessment
- ICICI Securities is likely to benefit from fundamental transformation in the Indian savings environment
- ICICI Securities Limited has met with good anchor demand.
- ICICI Securities Limited is one of the pioneers in the e-brokerage business in India, along with its strong brand name, large registered customer base, wide range of products across asset classes, complimentary advisory services. How ever over the years this advantage may have got blunted.
- Retail brokerage revenue contributed around 90.5% in the total brokerage revenue in FY17. This can get affected in the scenario of a slowdown in equity markets.
- The ICICI Securities IPO appears to be fully priced and even though it may see reasonable QIB demand, I do not intend to apply in ICICI Securities IPO as of now.
Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. I may have vested interest in every stock I discuss and my views may be biased. Please do your own due diligence as stock market investments have high degree of inherent risk.