ICICI Securities surges 14%, hits new 52-wk high; stock up 38% in 2 months

Shares of ICICI Securities climbed 14 per cent to hit a 52-week high of Rs 415.15 on the BSE on Friday amid expectation of earnings improvement going forward.

The counter has seen huge activities with trading volumes rose more than two-fold today. A combined 766,750 equity shares had changed hands on the NSE and BSE till 10:14 am. In comparison, the S&P BSE Sensex was up 0.46 per cent at 41,354 points.

In the past two months, the stock has rallied 38 per cent after the company reported a consolidated net profit of Rs 135 crore in September quarter (Q2FY20), up 1 per cent as against the corresponding period last year.

The ICICI Group company’s consolidated revenue declined 9 per cent to Rs 418 crore in Q2FY20, compared to revenue of Rs 458 crore in Q2FY19 due to decline in retail broking revenues and regulatory changes in mutual funds distribution business.

Apart from being India's largest retail broker, ICICI Securities has many firsts to its credit including beingn India's first 3-in-1 platform, largest customer base, widest product offering and the most extensive geographic presence.

Brokerage firm Antique Stock Broking initiated coverage on ICICI Securities with ‘buy’ rating and target price of Rs 450 per share. The stock hit an all-time high of Rs 463 on April 2018 on the BSE.

“Unlike most of the innovative companies, ICICI Securities isn't resting on its past laurels and has started its journey to transform from India's largest retail broker to India's largest "Financial Supermarket" for retail investors just like Charles Schwab. This journey has the potential to not only reduce the cyclicality of business but also provide long run way for growth”, analysts said in a report dated December 19, 2019.

“ICICI Securities is taking initiatives to penetrate deeper into ICICI Bank’s (parent) client base and improve engagement with clients through a combination of the revenue sharing arrangement and new products like Prime. A successful ramp-up here will support revenue and profit, but we would watch out for the ramp-up of its ESOP financing business,” analysts at CLSA said in result update.

The foreign brokerage firm raises earnings a bit to factor-in a better top-line and sees a 15 per cent CAGR over FY19-22. Its valuation is reasonable and an improvement in its growth outlook could drive a rerating, it said.