2021-07-21 ICICI Securities Ltd. Motilal Oswal

743.80 915.00 743.80
(-2.98%) 26.80 Buy

Strong performance across revenue streams

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...

2021-04-22 ICICI Securities Ltd. HDFC Securities 452.05 560.00 452.05
(59.63%) Target met Accumulate

HSIE Results Daily: ICICI Securities

We maintain an ADD rating with a target price of INR560, i.e. 23x Mar-23E EPS. ICICI Securities: With FY21 being a super-normal year for brokers, ISEC reported pure broking revenue growth of 55/12% YoY/QoQ. With implementation of the second phase of peak margin, ISEC lost another 330bps QoQ in derivative market share. However, we are comforted by (1) the companys focus on gaining client share through diversified channels and (2) its initiatives to recoup its market share. However, we remain wary of the impact the successive phases of peak margin regulations may have on the overall trading activity. Discount brokers acquiring a higher client share remains a concern. Given the highly cyclical nature of the business and the stage of the current cycle, we expect earnings to moderate in FY22/23E

2021-04-21 ICICI Securities Ltd. Motilal Oswal

452.05 650.00 452.05
(59.63%) Target met Buy

Strong customer acquisition; Distribution segment healthy

4QFY21 was another robust quarter in an overall strong year for ISEC. PAT more than doubled YoY to INR3.3b (45% beat), driven by 54% growth in revenue, coupled with significantly lower C/I ratio. In FY21, ISEC delivered 50%/97% revenue/PAT growth. We increase our FY22E/FY23E EPS estimate by ~10% to factor in healthy brokerage revenue. Maintain Buy with a TP of INR650/share (18x FY23E EPS)....

2021-01-27 ICICI Securities Ltd. HDFC Securities

 

413.75 560.00 413.75
(74.40%) Target met Accumulate

ICICI Securities (3QFY21): Bumpy road ahead. Maintain ADD

We maintain an ADD rating with a target price of Rs 560, i.e. 23x Sep-22E EPS. Led by healthy trading activity (ADTV cash/derivative: +80.4/29.2% YoY), ISEC reported pure broking revenue growth of 61.3/-7.6% YoY/QoQ. With part implementation of peak margin, ISEC lost 250bps QoQ in derivative market share. This loss was stark at 460bps MoM in Dec-20. We remain wary of the impact of the successive phases of peak margin regulations on overall trading activity. Discount brokers acquiring higher client share remains a concern. Given the highly cyclical nature of the business, we are concerned that we may be closer to peak earnings and worry that the market may be giving the company closer-to-peak multiple.

2020-10-30 ICICI Securities Ltd. HDFC Securities

 

463.45 550.00 463.45
(55.70%) Target met Buy

HSIE Results Daily: Maruti Suzuki, Larsen & Toubro, Hero Motocorp, Havells, AU Small Finance Bank, ICICI ...

AU Small Finance Bank: AUBANKs 2QFY21 net earnings were ~110% ahead of estimates, buoyed by gains from the stake sale in AAVAS. Adjusted earnings, too, were ~28% ahead of estimates, on account of lower-than-expected provisions. The bank saw a sustained improvement in collection efficiency and did not make incremental COVID-19 related provisions. While these trends are promising, we continue to model for a sharp rise in GNPAs and elevated provisions in FY21E. Strong CASA growth, led by retail deposits, was another positive. We like the bank for its strong fundamentals and believe that its long-term prospects remain intact. We maintain ADD with a target price of Rs 770. ICICI Securities: Led by healthy trading activity (ADTV cash/derivative: +3.5/32.3% QoQ), ISEC reported pure broking revenue growth of 10.2% QoQ. ISEC also gained market share in the cash segment by 240/40bps YoY/QoQ to 11.1%. This primarily drove the 12.5% PAT beat. We believe this is cyclical, and as the volatility and retail participation reduce, we expect ISECs market share to normalise. Additionally, we remain watchful of the impact that increased upfront margin requirements could have. Discount brokers acquiring a higher client share remains a concern. Driven by the revenue and PAT beat, we increase our FY21/22/23E APAT estimates by 8.8/3.2/4.3%. Given the highly cyclical nature of the business, we are concerned that we may be closer to peak earnings and worry that the market may be giving it a closer-to-peak multiple. We maintain an ADD rating with a higher target price of Rs 550, i.e. 23x Sep-22E EPS....

2020-10-29 ICICI Securities Ltd. HDFC Securities

 

465.10 550.00 465.10
(55.15%) Target met Accumulate

ICICI Securities (2QFY21): Strong cash ADTV growth drives PAT growth. Maintain ADD

We maintain an ADD rating with a higher target price of Rs 550, i.e. 23x Sep-22E EPS. Led by healthy trading activity (ADTV cash/derivative: +3.5/32.3% QoQ), ISEC reported pure broking revenue growth of 10.2% QoQ. ISEC also gained market share in the cash segment by 240/40bps YoY/QoQ to 11.1%. This primarily drove the 12.5% PAT beat. We believe this is cyclical, and as the volatility and retail participation reduce, we expect ISECs market share to normalise. Additionally, we remain watchful of the impact that increased upfront margin requirements could have. Discount brokers acquiring a higher client share remains a concern. Driven by the revenue and PAT beat, we increase our FY21/22/23E APAT estimates by 8.8/3.2/4.3%. Given the highly cyclical nature of the business, we are concerned that we may be closer to peak earnings and worry that the market may be giving it a closer-to-peak multiple.

2020-09-11 ICICI Securities Ltd. Motilal Oswal

473.55 625.00 473.55
(52.38%) Target met Buy

Focus on a one-stop financial intermediary

11 September 2019 by deepening the partner network and enhancing the tie-up with ICICIB, 2) increasing wallet share of clients with a focus on ARPU, 3) providing a better engagement experience, 4) introducing digital agility, and 5) enhancing operational efficiency (i.e. reducing the C/I ratio). ISEC acquired 0.45m customers in FY20, largely similar to earlier years. While market share in terms of NSE-active clients improved 40bp YoY to 10% in FY20, the company is focused on increasing it further. ICICI Securities Over the past two years, ISEC has been focused on improving its digital capabilities and thus enhancing customer experience. The network of IFAs, sub-brokers, investment advisors (IAs), and accounts payables (APs) grew 32% YoY to 9,400+ in FY20, which further increased to 12,500+ in 1QFY21. As a result, the number of clients sourced through partnerships grew 70% YoY. ISEC launched a number of new propositions in the year.

2020-07-23 ICICI Securities Ltd. HDFC Securities

 

541.00 540.00 541.00
(33.38%) Target met Sell

ICICI Securities (1QFY21): Strong cash ADTV growth drives PAT growth. Maintain REDUCE

We maintain a REDUCE rating with a target price of Rs 540, i.e. 25x FY22E EPS Increased cash market activity is expected to boost broking revenue by 16.3% YoY in FY21E. We believe this would be cyclical, and as volatility and retail participation recede, we expect ISECs market share to drop back to ~8%. We remain concerned about discount brokers acquiring a higher share in active clients and believe the yields would remain pressured. We expect a muted year for distribution income (-10.7% YoY) as average MF assets and life insurance sales could remain subdued. We expect the C/I ratio to improve substantially to 50.8% in FY21E, driving FY21/22E PAT growth of 18.5/3.9% YoY. Given the highly cyclical nature of the business, we are concerned that we may be closer to peak earnings and worry that the market may be ascribing a closer-to-peak multiple.

2020-07-01 ICICI Securities Ltd. Ashika Research 472.50 620.00 472.50
(52.72%) Target met Buy 2020-06-10 ICICI Securities Ltd. HDFC Securities

 

405.50 442.00 405.50
(77.95%) Target met Accumulate

ICICI Securities (Update): Pushing the Right Levers. Upgrade to ADD

We upgrade ISEC to ADD (from SELL) with TP of Rs 442 (22.5x FY22E EPS). We recently interacted with the management of ISEC and were impressed by its focus on digital initiatives. We believe C/I ratios will improve over FY20-22E to 45.9% (-520bps). Additionally, in the near term increased market volatility is expected to boost revenues and earnings.

2020-05-19 ICICI Securities Ltd. Motilal Oswal 364.00 460.00 364.00
(98.24%) Target met Buy

Re-engineering the business model; Building a diversified franchise

19 Securities ICICI May 2020 19 May 2020 ICICI Securities ISEC is focusing on generating higher average revenue per customer (ARPU) and customer acquisition, which should lead to superior overall volumes. Core to the ISEC strategy is ARPU (including distribution and lending revenues), and thus, cross-selling and innovative offerings are likely to be key initiatives in revenue generation. However, with trail commissions on net flows higher than those on the back book, yields improved to 66bp in 4QFY20. Commission yields are now stable/marginally improving and revenues should grow in line with AUM. In addition to providing an extra revenue stream, the distribution business also helps to reduce overall volatility of earnings stemming from the brokerage and investment banking segments. In addition to brokerage and distribution, other key revenue sources for ISEC include margin funding and investment banking.

2020-05-08 ICICI Securities Ltd. HDFC Securities

358.60 316.00 358.60
(101.23%) Sell

ICICI Securities (4QFY20): Strong Quarter. Maintain SELL

We expect FY21E to be a challenging year for broking as lower prices imply lower ADTVs. Distribution revenues will be impacted by lower MF AAUMs, a difficult environment for insurance, and alternative investment product sales. Earnings are expected to remain flat over FY20-22E. We rate ISEC a SELL with a TP of Rs 316 (18x Mar-22E EPS). Any strong rally in equity markets, higher market share, better environment for financial product sales, and any marked reduction in costs remain key risks. Hightened market volatility and ADTVs in Mar-20 resulted in higher core $QFY20 broking revenues (+25.6/27.9% YoY/QoQ) driving total adj. revenues to Rs 4.5bn (+22.0/15.8% YoY/QoQ, +14.6% vs. est.) and APAT to Rs 1.6bn (+76.8/13.6% YoY/QoQ, +18.8% vs. est.). We increase our FY21E/22E earnings estimates by 12.7/10.8% but continue to rate ISEC a SELL with an increased TP of Rs 316 (P/E of 18x FY22E).

2020-02-25 ICICI Securities Ltd. HDFC Securities

499.65 435.00 499.65
(44.42%) Target met Sell

ICICI Securities (Update): Well Positioned but Pricey. Maintain SELL

While volumes continue to increase deteriorating mix, and increased competition is expected to keep yields down. Distribution revenues have bottomed out. ISEC is rapidly building loan assets which will drive earnings in the near term. All the above, along with new initiatives and cost control will drive earnings at FY20-22E CAGR of 17.9%. Our rating on ISEC remains a SELL, despite us raising target multiple to 18x (PEG=1), increasing our TP to Rs 435. Our TP implies a FY19-31E APAT CAGR of 17.3%. Risks: Uptick in equity markets coupled with increased retail participation. We attended ISECs sell side analyst day and were impressed by the strong client franchise, innovations and focus on adding value propositions (apart from pricing) for customers. While we appreciate the fundamental strength of ISECs business model, we believe valuations at FY21E/22E P/E of 23.5/20.8x are stretched. We rate ISEC a SELL with TP of Rs 435 (18x FY22E EPS).

2020-01-21 ICICI Securities Ltd. HDFC Securities

 

430.30 376.00 430.30
(67.70%) Target met Sell

ICICI Securities (3QFY20): Loan assets drive earnings upgrade. Maintain SELL

While volumes increase deteriorating mix is expected to keep yields under check. Distribution revenues have bottomed out. ISEC is rapidly building loan assets which will drive earnings in the near term. All the above, along with cost control will drive earnings at FY20-22E CAGR of 17.9%. We increase FY20E/21E/22E APAT estimates by 0.6/4.8/5.1%, and continue to rate ISEC a SELL with a TP of Rs 376 (16x Dec-21E EPS). We believe 16x is a fair multiple for the stock given market linked nature of its business lines. A rally in equity markets coupled with increased retail participation remains a key risk. Higher core broking revenues and strong growth in funding book drive profits, while distribution and IB remain soft. Cost decline is lower than our expectation.

2019-10-23 ICICI Securities Ltd. HDFC Securities

309.00 288.00 309.00
(133.53%) Target met Neutral

ICICI Securities (2QFY20): Distribution and IB see uptick. Maintain NEUTRAL

With increased competitive intensity and changing mix, broking yields are expected to further decline. Additionally, regulatory reduction in MF TERs continues to pressure distribution revenues in the short term. Cost control will be a key earnings driver (~14.4% YoY in FY20E). We expect FY19-22E APAT CAGR of 12.7%. A rally in equity markets coupled with increased retail participation remains a key risk to our call. Higher than expected distribution and IB revenues offsets softer broking revenues. Cost decline is lower than expectation. We increase FY20E/21E/22E APAT estimates by 7.6/8.1/9.0% to build in better distribution and IB outlook. We rate ISEC a NEUTRAL with a TP of Rs 288 (14x Sep-21E EPS).

2019-07-23 ICICI Securities Ltd. HDFC Securities

225.55 225.00 225.55
(219.93%) Target met Neutral

ICICI Securities (1QFY20): Long grind Maintain NEUTRAL

With increased competitive intensity and changing mix, we except broking yields to continue to decline. Additionally, regulatory reduction in MF TERs continues to pressure distribution revenues in the short term. Cost control will be a key earnings driver (~-10% YoY in FY20E) and we await detailed management commentary on the same. We expect an anemic FY19-22E APAT CAGR of 5.4%. A rally in equity markets coupled with increased retail participation remains a key risk to our call. Despite softer revenues, better cost management aided ISEC to report an in-line 1QFY20. ISEC continues to diversify its revenue streams (distribution of bank products) and focus on cost reduction, as challenges to its core broking and distribution revenue continue. We rate ISEC a NEUTRAL with a TP of Rs 225 (14x Jun-21 EPS).

2019-04-24 ICICI Securities Ltd. HDFC Securities

215.00 235.00 215.00
(235.63%) Target met Neutral

ICICI Securities (4QFY19): Facing stiff headwinds. Maintain NEUTRAL

With increased competitive intensitywe except broking yields to decline further. Additionally, regulatory reduction in MF TERs will pressure distribution revenues. The only silver lining we see is the emerging cost consciousness. We expect an anemic FY19-21E PAT CAGR of 4.8% p.a. Longer than expected rally in equity markets coupled with increased retail participation remains a key risk. We rate ISEC a NEUTRAL post weaker than expected 4QFY19. Challenges to revenue and earnings growth continue due to increased competition and regulatory pressures. Our TP stands at Rs 235 (14x FY21E EPS).

2019-01-15 ICICI Securities Ltd. HDFC Securities

 

260.70 298.00 260.70
(176.79%) Target met Neutral

ICICI Securities (3QFY19): Revenues dip while costs sustain. Downgrade to NEUTRAL

As all major segments of the business are under pressure we downgrade stock to NEUTRAL with a TP of Rs 298 (+8.6%) based on 16x Dec-20E EPS. Our multiple is premised on growth opportunities, market leadership and ISECs strong financial products distribution franchise. ISEC reported a disappointing 3QFY19 with revenues/PAT at Rs 3.9bn/1.0bn (-18/-34% YoY). Broking/distribution revenues declined 17/12% YoY to Rs 2.3/1.1bn, while investment banking revenues declined 37% YoY to Rs 256mn. EBITDA declined 33% YoY as management was able to reduce costs only by 3% YoY.

2018-09-25 ICICI Securities Ltd. HDFC Securities 298.95 352.00 298.95
(141.38%) Buy

ICICI Securities (Initiating Coverage): Resilient in turbulent times! BUY

We initiate with a BUY rating and TP of Rs 352 (+19.1%). ICICI Securities (ISEC) is one of the strongest retail investing platforms for direct equities (9.2% vol. market share). The company has retained its market leadership position despite intense competition. ISEC has also built a strong financial products distribution business (26.2% of revenues). We believe that ISEC will be a key beneficiary as financialization of savings grows.

2018-03-22 ICICI Securities Ltd. Ventura
IPO Note

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