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ICICI Securities Limited has posted impressive Q4FY24 results, marked by a robust 50% overall revenue growth and significant improvements in market share across various revenue-generating metrics. This growth primarily stems from enhanced broking revenues and a slight improvement in Opex ratios. The company's strategic initiatives are evidently paying off, leading to notable enhancements across key focus areas. Profit after Tax has surged to Rs. 537 crore, marking a substantial 104% YoY increase and a 15% QoQ rise. This success can be attributed to effective diversification strategies and a customer-centric coverage model. Moreover, the company continues to dominate the MTF segment, boasting an impressive 83% YoY growth and commanding a substantial 20% market share. However, despite these achievements, coverage on ICICI Securities is being dropped due to the company's approval for delisting. Under this arrangement, shareholders will receive 67 shares of ICICI Bank for every 100 shares of ICICI Securities.

Revenue growth across business segments:

In Q4FY24, ICICI Securities showcased robust revenue growth across diverse business segments. Retail Equities and Allied revenue notably surged by 84% YoY to reach Rs. 904 crore, driven by a remarkable 140% YoY increase in equity revenue and a 25% YoY uptick in derivative revenue. Distribution income experienced a slight decline of 2% YoY, amounting to Rs. 190 crore. Private Wealth Management (PWM) revenue demonstrated exceptional growth,soaring by 92% YoY to reach Rs. 490 crore. On the institutional front, Issuer Services and Advisory revenue witnessed a remarkable 724% YoY increase, reaching Rs. 104 crore, while Institutional Equity & Allied Revenue grew impressively by 118% YoY, totaling Rs. 107 crore. MF and other distribution revenue grew by 27% YoY and 50% YoY respectively. Loans distributed for Q4FY24 amounted to Rs. 1,870 crore. The MTF book sustained its strong performance, with an 83% YoY growth, maintaining a leading market share position at 20%.

Improving market share:

In Q4FY24, ICICI Securities significantly strengthened its market presence across various parameters. The retail cash equity market share notably increased from 11% to 12.7% YoY, while the retail option premium market shares rose from 6.8% to 7.8% YoY. In the commodity market segment, the company continued to make strides, elevating its market share from 6.1% to 7.1% YoY. Moreover, ICICI Securities maintained its leadership in the MTF (Margin Trading Fund)segment, commanding a substantial ~20% market share. The addition of approximately 7,500 Private Wealth Management (PWM) clients propelled the company's PWM client base to over 108,000, further consolidating its market position.

Diversifying the revenues and reducing cyclical component:

In Q4FY24, the Company showcased its commitment to diversifying revenue sources, aiming to reduce reliance on cyclical elements. Notably, the equity business comprised 27% of total revenue. Derivatives revenue now represents 11% of overall revenue, while Allied revenue constitutes 28%, and the Distribution business contributes 12%. These segments demonstrate lower sensitivity to market fluctuations and are less cyclical, reflecting the Company's successful efforts to establish a more stable and resilient revenue stream.

Outlook:

Despite facing short-term challenges in the broking business, the company's proactive measures to lessen reliance on cyclical factors and broaden revenue streams have brought a degree of stability to its overall revenue growth. Continuous investments in technology and franchise development are expected to be instrumental in building a scalable franchise for ISEC. However, following the recent announcement of ICICI Securities' delisting, we are dropping our coverage on ICICI Securities stock. Under the delisting arrangement, shareholders will receive 67 shares of ICICI Bank for every 100 shares of ICICI Securities.

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