ICICI Securities (I-Sec), a part of the ICICI Group and India’s leading retail led equity franchise, distributor of financial products, and investment banker, today announced its financial results for quarter ending June 30th 2019 (Q1FY20).
The company reported consolidated revenue of ` 402 crore in Q1FY20, against ` 436 crore in Q1FY19, a decline of 8%. Consolidated Profit after tax (PAT) for Q1FY20 stood at ` 114 crore against ` 134 crore in Q1FY19, a decline of 15%.
Business Highlights
In Broking, I-Sec has over 4.5 million operational accounts, of which about 1 lakh were added during the quarter. The number of NSE active clients number 0.88 million, accounting for 9.8% market share which is at 18 month high.
I-Sec’s equity market share grew by 70 basis points on-year to 8.1% in Q1FY20.
Total brokerage revenue (excluding interest income) stood at ` 220 crore for Q1FY20, down 4% vs Q1FY19. Adjusting for lower trading days during the quarter – Q1FY20 had four fewer trading days – broking revenue was flat YoY. Broking business contributed 55% towards the company’s overall topline.
While retail brokerage revenue declined by 6% year-on-year, institutional business grew by 12%.
The company has received very good response to its annual subscription plan ‘ICICI direct Prime’ that provide a package of competitive pricing, exclusive research and higher eATM (payout with 30 mins on selling stocks) limits of per day depending on the plan being opted by the customer. Currently about one lakh clients have subscribed to ICICI direct Prime.
I-Sec’s recently launched ICICI Bank led customer acquisition arrangement is ramping up well and is helping the company target affluent and investment oriented clients. There is over 40% uptick in the activation rate of bank acquired customers. The company is intensifying its focus on acquiring the Non-Resident Indians, a huge and under penetrated opportunity.
Distribution revenue stood at ` 99 crore in Q1FY20 against ` 116 crore in Q1FY2019, down 15%. This is in line with the expected reduction in Total Expense Ratio (TER) under the new regulation effective 1st April 2019.
The company has recently expanded its distribution business by launching digital distribution of retail loans. Besides building a new non-cyclical revenue stream, it also marks its presence in the entire financial planning journey of a customer’s lifecycle – from investment to protection to assets. Through icicidirect.com, customers can now get Personal Loans, Auto Loans, Credit Cards and Home Loan Top ups offered by ICICI Bank, and soon Home Loans and Loans on credit cards would also be offered. ICICI Securities will earn a distribution commission on selling these products.
I-Sec remains India’s second largest non-bank MF distributor by revenue (based on FY19 revenue) and has expanded its revenue market share to 4% in FY19. Average AUM of the mutual funds distributed by the company increased by 7% on-year to ` 368 billion in Q1FY20. The company has strong offline presence through a network of ~193 ICICIdirect branches in 75+ cities, a nationwide network of 7500+ sub-brokers, authorized persons, IFAs & IAs.
With increased focus on other products like fixed income and deposits, life, medical and general insurance, NPS, SGBs etc., non-MF distribution revenue rose 9% during the quarter against the corresponding quarter last year.
Our Investment Banking revenue stood at ` 17 crore in Q1-FY20, a decline of 48% from ` 32 crore in Q1-FY19 due to subdued ECM activity. I-Sec is ranked 1st in the IPO/ InvIT space by value in Q1FY20 (Source: Prime database). The company handled eight investment banking deals in Q1-FY20 vs six in Q1FY19. We have strong IPO pipeline (as per SEBI filling) of over ` 180 billion. We continued to focus on building up advisory capabilities and executed three such deals in Q1FY20 against two in Q1FY19.
Management Commentary
Mr. Vijay Chandok, MD & CEO, said, “To tap into the growing market opportunity, a series of new initiatives has been planned by the company to scale up, monetise client value, improve client engagement, improve digital agility, and better cost efficiency. Digital is going to be a key piece in the whole journey and I-Sec is actively working with various fintechs to identify winning solutions which can be offered to our customers through our platform. Other areas we see active digital deployment are in advanced analytics, AI, and Big Data for better customer insights and personalised engagement.”
