ICICI Bank, one of India's leading private sector banks, announced on June 26 that it will be considering a proposal for the delisting of ICICI Securities, a subsidiary of the bank.
Furthermore, sources told CNBC-TV18 that ICICI Bank may consider the delisting proposal through a share swap instead of a cash payout. As of the March quarter, ICICI Bank held a 74.85 percent stake in its broking arm.
Following this, ICICI Securities' stock zoomed over 9 percent on the NSE. At 9:40 am, the stock was quoting at Rs 611.85 after hitting 52-week high of Rs 647. The stock had also rallied on June 23, thus taking cumulative two-day gain to over 17 percent. ICICI Bank, too, was quoting higher by 0.5 percent at Rs 929.80.
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The decision comes five years after the broking firm made its debut on the bourses. In April 2018, the Rs 4,000 crore-IPO of ICICI Securities had received poor response. "On its listing date, it was listed below the issue price and since then the stock has mostly underperformed benchmark indices," Prashanth Tapse, Senior VP (Research), Mehta Equities said.
The IPO was subscribed 78 percent overall, with retail investors bidding only 89 percent of the allotted quota.
In Q4, ICICI Securities reported a consolidated net profit of Rs 263 crore for the quarter ended March, down 23 percent as against Rs 340 crore reported in the corresponding period of last year.
The board in April recommended a final dividend of Rs 9.25 per equity share of face value of Rs 5 each to shareholders of the company.
After Q4 results, global research and broking firm Citi had said that near-term cost pressures will continue to weigh on ICICI Securities' earnings. It has a 'sell' rating on the stock with a target price of Rs 440 per share.
To reduce dependence on broking, the company had been diversifying into wealth management, loans and general insurance.
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