ICICI Securities Q1 FY23 Results Show Revenue At Rs. 795 Crore, Up 6% YoY

 Q1 FY23 Performance Highlights:

·         Revenue at Rs 795 crore, up 6% YoY on back of healthy growth in retail allied and distribution income

·         PAT for the quarter stood at Rs 274 crore

·         The company saw improvement in market share across various segments:

o   Retail derivative market share registered growth for first time in 4 quarters as our market share improved from 3.3% in Q4FY22 to 3.5%

o   Recently launched commodity trading segment is performing well and continues to gain market share. It was 4.4% for Q1FY23.

o   Stable NSE Active market share of 8.4%

o   MF AUM market share increased to 1.7%, up from 1.6% YoY.

·         The company witnessed continued traction in product proposition:

o   Average MTF book grew 97% YoY; maintained leadership position with 22.4% market share.

o   More than a million customers have taken Prime membership. Prime and Prepaid customers together contribute 71 % of retail equities revenue.

o   ISEC Mutual Fund average AUM (exc. Direct) up 11% YoY; Equity AUM up 20%

o   SIP Equity AUM increased by 9% YoY to ~Rs 126 bn v/s industry growth of 8%

o   PMS book grew 10% QoQ; crossed INR 8 bn

o   Markets and Money app combined downloads have crossed 2 million mark and are rated ~4 on play store.

·         The company made several launches to further improve its product proposition:

o   LIFEY and Masters of the Street which resonates well with wealth customers.

o   On Experience and Analytical tools side for trading segment, the company rolled out new products like Smart Order Platform, Easy Options and Trading View

·         The company entered into exclusive partnership with HSBC Bank which is the first of its kind for them globally, to offer 3-in-1 broking services to their customers in India. This will provide us access to their HNI customer base.

Commenting on the results and financial performance, Mr. Vijay Chandok, Managing Director and CEO of ICICI Securities said: In this “quarter of moderation” for the industry, we focused on gaining market share, diversifying our revenue mix, containing costs and building product pipeline as we continued to make strategic investment in technology to be “Future Ready”. Our recently launched product proposition and digital properties continue to witness healthy traction which is a testimony to our execution capabilities. Our digital innovation helps us differentiate our product proposition and embrace a broader client universe as momentum continued in our broad-based and digital-led customer acquisition engine. As we continue our journey towards becoming a “digitally integrated financial marketplace”, our emphasis continues to be on diversification, operating leverage and strengthening product positioning by making strategic investments in technology to build a “future ready architecture” as well as on building a diversified talent pool. Through these strategic levers, we will offer highly customized solutions to partner our customers though their financial journey.

Business Highlights

ICICI Securities has a client base of ~80 lakhs, of which over 4.4 lakh customers were added during the quarter. Digital sourcing and open architecture approach continue to demonstrate strength with ~72% of new customers in the quarter coming from channels other than ICICI Bank. During the quarter, 62% of customers acquired are under 30 years of age (vs 60% YoY) and 85% are from tier II and below geographies (vs 78% YoY).

The company has over ~35 lakhs active clients (those who have transacted across any product categories in the last 12 months) and over 31 lakhs NSE active clients (those having traded on the NSE in the last 12 months), up 62% and 73% YoY respectively.

Total client assets stood at Rs 5.3 Lakh crore on 30th June, 2022, vs Rs 4.4 Lakh crore a year ago, up 20%.

In Q1FY23, Equities and Allied Business, which comprises retail equity, institutional equity, lending towards ESOP (Employee Stock Option Plans) & MTF (Margin Trade Funding), Prime & NEO subscription fees and other charges stood at Rs 524.6 crore. The Retail Equities and Allied Business reported revenues at Rs 475.9 crore, up 2% y-o-y, vs Rs 466.2 crore in Q1FY22. ESOP & MTF interest income rose 83% year-on-year to Rs 151.2 crore in Q1FY23 and the daily average funded book for the quarter for these businesses stood at ~ Rs 7,100 crore against Rs 3,630 crore in Q1FY23.

We continue to remain market leader in MTF with a 22.4% market share. The company continued to receive encouraging response to Prime plan that provides a package of privilege pricing, exclusive research, and higher eATM limits per day.

Our NPS score continued to increase this quarter as well as a result of improvements made in our customer journeys.

Institutional equities revenue during the quarter decreased by 17% y-o-y to Rs 48.6 crore, primarily due to slowdown in market volumes and decline in capital market deals.

Distribution business continues to scale well as revenue stood at Rs 152 crore in Q1FY23, up 28% y-o-y on the back of strong performance from Mutual Fund, Insurance and Other Products.

I-Sec is India’s leading MF distributor by revenue and assets and its MF revenues grew by 21% YoY to Rs 89.2 crore in Q1FY23. On the back of SIP count rising to ~ 10 lakhs in June 2022, from 8.5 lakhs in June 2021, the company’s market share in SIP flows stands at 3.4%. ICICI Securities’ MF AUM (excl direct) is up 11% YoY.

ICICI Securities is also a leading distributor of other financial products like loans, fixed income products, corporate bonds and deposits, insurance, bank Fixed Deposits (FD), Alternate Investment Funds (AIF), Portfolio Management Services (PMS), Sovereign Gold Bonds (SGB), and National Pension Scheme (NPS). Revenue from Life Insurance business grew 61% YoY to Rs 12.6 crore while revenue from other distribution products grew 34% on YoY basis. The company disbursed Rs 619 crore worth of loans during the quarter, against ~ Rs 318 crore in the same period last year. I-Sec’s Private Wealth Management (PWM) business reported Rs 2.3 billion of revenue in Q1FY23 up 26% y-o-y. The PWM business is a home-grown franchise serving ~70,000 High Networth and Ultra High Networth (HNI/U-HNI) clients (~1,600 clients added during the quarter), with an asset base of ?2.8 Lakh crore, up 38% year-on-year.

Our Issuer Services and Advisory business (Investment Banking) revenue stood at Rs 35 crore in Q1FY23. This business was impacted as this quarter was not deal conducive due to postponement of public market issues. ICICI Securities is ranked #1 in IPO/ FPO/ InvIT/ ReIT issuance with a 66% mobilization market-share. The company has a strong pipeline of 42 deals amounting over Rs 825 bn, and 23 deals where amount is yet to be decided