Motilal Oswal maintains ‘Purchase’ ranking on ICICI Securities with TP of Rs 650

Distribution income was up 22% YoY to Rs 1.41b (QoQ not strictly comparable resulting from seasonality).

4QFY21 was one other sturdy quarter in an general sturdy yr for ISEC. PAT greater than doubled YoY to INR3.3b (45% beat), pushed by 54% progress in income, coupled with considerably decrease C/I ratio. In FY21, ISEC delivered 50%/97% income/PAT progress. We enhance our FY22E/FY23E EPS estimate by ~10% to think about wholesome brokerage income. Preserve Purchase with a TP of Rs 650/share (18x FY23E EPS).

ISEC added 350k new clients v/s 139k QoQ. Of this, 220k clients have been added by way of the Digital channel initiated final yr. Round 55% of such accounts are being opened by non-ICICIBC channels. The activation price jumped to 84% from mid-60s ranges prior to now two quarters. In consequence, the variety of NSE lively purchasers elevated to 1.6m from 1.3m QoQ. Nonetheless, its money market share dipped by ~100bp to 9.5% QoQ. Within the F&O section, ISEC’s market share had dropped to three.5% in Dec’20 put up the implementation of recent rules. The corporate largely maintained its market share (~3%) in 4QFY21. Retail Broking income improved 7% QoQ to INR3.5b regardless of the moderation in market share.

Distribution income was up 22% YoY to Rs 1.41b (QoQ not strictly comparable resulting from seasonality). This was pushed largely by all segments. In MF distribution, the SIP rely elevated 12% YoY to 0.74m, whereas ISEC’s market share improved 75bp YoY to 4.05%. General MF AUM was up 20% YoY to Rs 413b. The Institutional Equities section delivered 30% YoY income progress to Rs 480m. Given the buoyant capital market, income from Funding Banking greater than doubled QoQ to Rs 533m.

C/I ratio declined 200bp QoQ and 17pp YoY to 40%. The administration has guided at close to time period C/I ratio above these ranges. The lending e book grew 37% QoQ to Rs 25.7b.

Modifications in ISEC’s product and sourcing technique have yielded outcomes over the previous yr. The ‘NEO’ plan has helped counter competitors from low cost brokers in addition to some conventional brokers who provide low cost plans. We are actually seeing the digital sourcing mannequin achieve sturdy traction when it comes to buyer acquisition. After a couple of turbulent years, the Distribution enterprise has stabilized. The impression of rules on margin, coupled with general developments in business volumes, could be key to be careful for in FY22E. We increase our FY22E/FY23E EPS estimate by ~10%.

Preserve Purchase with a TP of INR650 per share (18x FY23E EPS).

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