ICICI Bank considers ICICI Securities delisting on 29 June

ICICI Securities Q1FY24 Results: Consolidated PAT of Rs. 270.84 Cr

ICICI Bank Board to Discuss ICICI Securities Delisting on 29 June

Mumbai: ICICI Bank Ltd, a leading private sector lender, has announced that its board will evaluate a proposal on 29 June regarding the delisting of equity shares of its stockbroking subsidiary, ICICI Securities.

Following the news, ICICI Securities witnessed a significant surge in its share price, reaching ₹647 per share during intraday trading before settling at ₹621.9. The company presently holds a market capitalization of ₹20,096 crore. Over the past year, ICICI Securities has delivered an impressive return of 42% to investors, surpassing the Nifty 50 index’s return of 19%.

The proposed delisting, as stated in a regulatory filing by the bank, will be executed through a scheme of arrangement. On the same day, the board of ICICI Securities will convene to consider the proposed delisting of shares. Established in 1995, ICICI Securities became a publicly listed entity in 2018 and offers a wide range of institutional and retail broking services, including margin trade finance, ESOP finance, distribution of financial products, merchant banking, and advisory services. As of 31 March, ICICI Bank holds a majority stake of 74.85% in the company.

A reliable source familiar with the matter revealed that the bank recognizes the advantages of maintaining this business as a wholly-owned subsidiary, given its strong interdependence with the lender. The decision to list ICICI Securities five years ago may have aimed to enable the company to raise funds at a more favorable rate compared to unlisted entities.

“This business does not require significant capital investments, so that advantage remains underutilized,” stated the source. The bank’s objective now is to consolidate its operations. After the demerger, ICICI Securities shareholders will receive shares of the bank.

Interestingly, ICICI Bank recently unveiled plans to increase its stake in ICICI Lombard, its general insurance subsidiary, by up to 4% through multiple tranches. The bank has committed to acquiring at least a 2.5% stake of the total 4% by 9 September 2024. As of 31 March, ICICI Bank already holds a 48.02% stake in ICICI Lombard.

In the meantime, ICICI Securities reported a net profit of ₹262.7 crore for the quarter ending in March, reflecting a 23% decline compared to the same period last year.

During an analyst briefing on 19 April, Vijay Chandok, CEO of ICICI Securities, highlighted that the retail market’s enthusiasm and activity had moderated in FY23. Cash volumes exhibited a downward trend, and the fundraising markets remained subdued compared to the previous fiscal year.

“Regarding Q4, the business environment remained consistent with the overall trends observed throughout the year,” Chandok explained.

He further emphasized that the company has been actively diversifying its revenue streams, reducing its reliance on cyclical components, particularly cash equity broking.

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“In the last quarter, cash equity broking accounted for only 20% of our total revenue, whereas a few years ago, it contributed more than 50% of our earnings. On the other hand, revenue from derivative brokering has been increasing steadily for the past seven quarters and now represents approximately 15% of our total revenue,” Chandok elaborated.

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About ICICI Bank:

ICICI Bank Limited, headquartered in Mumbai, is a leading Indian multinational bank and financial services company. It provides an extensive array of banking products and financial services to both corporate and retail customers. The bank offers its diverse range of services through various delivery channels and specialized subsidiaries. These subsidiaries cater to investment banking, life and non-life insurance, venture capital, and asset management sectors.

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