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ICICI Securities Limited reported robust Q3FY24 results, showcasing a substantial 50% overall revenue growth and notable market share improvements across various revenue-generating parameters. The Profit after Tax surged to 466 crore, reflecting a significant 66% YoY increase and a 10% QoQ rise. The company's success is attributed to effective diversification strategies and a customer-centric coverage model. Key highlights include a 12% sequential growth and a remarkable 56% YoY increase in the wealth management segment, adding over 10,000 Private Wealth Management clients and surpassing a total base of 1,00,000+. Additionally, the company maintained its leading position in the MTF segment with a notable 56% YoY growth, commanding a substantial 22% market share. Despite these achievements, the stock is currently 'Under Review' due to the promoter's intention to delist ISEC.

Revenue growth across business segments:

ICICI Securities reported robust revenue growth across diverse business segments in Q3FY24. Retail Equities and Allied revenue saw a substantial 50% YoY increase, reaching ?755 crore, with equity revenue growing by 60% YoY to ?278 crore and derivative revenue up by 22% YoY to ?124 crore. Distribution income exhibited a 5% YoY growth, reaching ?175 crore. Private Wealth Management (PWM) revenue showed a remarkable 56% YoY increase, totaling ?403 crore. On the institutional front, Issuer Services and Advisory revenue surged to ?973 crore, marking a significant 102% YoY growth, while Institutional Equity & Allied Revenue reached ?903 crore, reflecting an impressive 94% YoY increase. MF and other distribution revenue grew by 14% YoY and 16% YoY respectively. Loans distributed for Q3FY24 stood at ?2,170 crore, up by 116% YoY. The MTF book continued its strong performance, growing by 56% YoY and maintaining a leadership position in market share with 22%.

Improving market share:

In Q3FY24, ICICI Securities significantly enhanced its market presence across diverse parameters. The retail cash equity market share experienced a notable increase from 10.5% to 13.1% YoY, while the retail option premium market shares rose from 7.5% to 8.0% YoY. The company demonstrated continued progress in the commodity market segment, elevating its market share from 5.6% to 7.5% YoY. Additionally, ICICI Securities maintained its stronghold in the MTF (Margin Trading Fund) segment, commanding a substantial ~22% market share. The addition of approximately 10,000 Private Wealth Management (PWM) clients propelled the company's PWM client base to over 1,00,000, further solidifying its market position.

Diversifying the revenues and reducing cyclical component:

In Q3FY24, the Company demonstrated its dedication to diversifying its revenue sources, thereby reducing its dependence on cyclical elements. Notably, the equity business accounted for 25% of the total revenue. Derivatives revenue now represents 10% of the overall revenue, while Allied revenue makes up 29%, and the Distribution business contributes 13%. These segments exhibit a lower sensitivity to market fluctuations and are less cyclical, showcasing the Company's effective initiatives in establishing a more stable and resilient revenue stream.

Outlook:

While encountering short-term headwind in the broking business, the company's proactive efforts to reduce dependence on cyclical factors and diversify revenue streams have introduced a level of stability to its overall revenue growth. Ongoing investments in technology and franchise development are anticipated to play a pivotal role in establishing a scalable franchise for ISEC. Nevertheless, in light of the recent announcement regarding ISEC's delisting, we have initiated a review of the ISEC stock.

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