Accumulate ICICI Securities; target of Rs 560: KR Choksey

KR Choksey recommended accumulate rating on ICICI Securities with a target price of Rs 560 in its research report dated January 20, 2023.

Broker Research

January 20, 2023 / 18:39 IST

KR Choksey's research report on ICICI Securities

I-Sec reported a revenue of INR 8,789 Mn, down 7% YoY, up 2% sequentially, due to overall toned-down industry growth across segments. The Retail Equities and Allied Business which includes lending towards MTF & ESOP, Prime & NEO subscription fees, reported revenues at INR5040 Mn, down 4% YoY. The Distribution Business reported revenues of INR1670 Mn in Q3FY23, up 2% YoY. EBITDA reported at INR 5,487.9 Mn (+4.8% qoq/ -9.7% yoy). EBITDA margin stood at 62.4% (140bps qoq / -220bps yoy), as employee expenses stood to INR 1,756Mn (-5.4% qoq / +1.6% yoy). PBT reported at INR 3,773Mn (-6.5% qoq / -25.9% yoy). PBT margin stood at 42.8% (-420bps qoq / -1130bps yoy) on account of higher interest expenses. PAT reported at INR 2,809 Mn (-6.5% qoq / -26.1% yoy). PAT margin stood at 31.9% (-310bps qoq / -850bps yoy). EPS stood at INR 8.7. The company saw its total client base crossed 87 Lakh, up 25% YoY, with 3 lakh clients added during the quarter. Total client assets on the platform during the quarter touched INR6 lakh crore, UP 7% YoY.

Outlook

Given the continued weak base in retail broking business owing to weak cash volumes, ICICI Securities` revenue is expected to stay cyclical and is likely to show moderate growth for near term. The derivatives volume has remained robust and the uptick in customer activation is likely to aid the growth for the coming quarters. ISEC is currently trading at P/E multiple of 12.5x / 10.9x to FY23E / FY24E EPS, respectively. We continue with the target price of INR 560 with a P/E multiple of 12x to FY24’s estimated EPS of INR 46.73, an upside of around 9.3% overthe CMP. Accordingly, we maintain ourrating to the “ACCUMULATE” rating on the stock.

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