Motilal Oswal is bullish on ICICI Securities has recommended buy rating on the stock with a target price of Rs 460 in its research report dated May 19, 2020.
Motilal Oswal 's research report on ICICI Securities
ICICI Securities (ISEC) is India's second largest broker (~10% active client market share) and non-bank mutual fund (MF) distributor (after NJ Invest). It also ranks amongst the largest wealth managers in the country with an AUM of ~INR830b. Robust technology platform, innovative offerings, strong brand and ability to leverage the large distribution network of its parent ICICIBC are the key factors differentiating ISEC from its peers. - Over the past year, the company has undertaken several initiatives (ICICIBC tie-up, 'Prime', 'Prepaid' and 'Options 20' models, Open architecture for broking business) to improve market share and profitability in the retail brokerage business, which have started to bear fruit. While ISEC is adding new product distribution and capacity in the wealth management/institutional equities business, it remains focused on the synergistic lending business to diversify revenues and reduce cyclicality.
Further, the company’s business model is capital light with a dividend payout ratio of ~70%. Initiate with Buy rating and TP of INR460 (22x FY22E EPS). Key risk to our thesis stems from an extended economic slowdown arising due to the COVID-19 crisis and the resultant impact on capital market activities.
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