ICICI SECURITIES Ltd

IPO
Price Band : ` 519 –` 520

Our Recommendation
“SUBSCRIBE”
 THE OFFER
Issue Open : 22 Mar 2018 to 26 Mar 2018

»» Issue Type: Book Built Issue IPO

»» Issue Size:

› Offer for Sale 77,249,508 Equity Shares @ ` 5

aggregating up to ` 4016.97 Cr

»» Face Value: ` 5 Per Equity Share

»» Issue Price: ` 519 - ` 520 Per Equity Share

»» Market Lot: 28 Shares

»» Minimum Order Quantity: 28 Shares

»» Listing At: NSE, BSE

 CAPITAL STRUCTURE
The share capital of Company, is set forth below:-
(Amount in ` except share data)

Authorized Share Capital :-

400,000,000 Equity Shares @5 Aggregate value 2,000,000,000
5,000,000 Equity Shares @100 Aggregate value 500,000,000

Issued, subscribed and paid up capital before the Issue :-

322,141,400 Equity Shares @5 Aggregate value 1,610,707,000

Present Issue:-
Offer for Sale 77,249,508 Equity Shares @ 5 aggregating up to
` 4016.97 Cr
 OBJECT OF THE OFFER
The objects of the Offer are:

 Promoter selling shareholder ICICI Bank will be entitled to

entire proceeds of the offer after deducting the offer
expenses and relevant taxes thereon. Hence, ICICI Securities
will not receive any proceeds from the offer.
 To achieve the benefits of listing the Equity Shares on the
Stock Exchanges.

The company expects that the listing of equity shares will

enhance its visibility and brand image and provide liquidity to its
existing shareholders.
 COMPANY OVERVIEW
ICICI is a leading technology-based securities firm in India that offers a wide
range of financial services including brokerage, financial product distribution
and investment banking and focuses on both retail and institutional clients. It
has been the largest equity broker in India since fiscal 2014 by brokerage
revenue and active customers in equities on the NSE(Source: CRISIL),
powered by significant retail brokerage business, which accounted for
90.5% of the revenue in fiscal 2017.
Headquartered in Mumbai, and operate offices in India, the United States,
Singapore and Oman, the company is a part of the ICICI Group, one of the
largest financial conglomerates in the country and promoted by ICICI Bank,
India’s largest private sector bank in terms of consolidated total assets with an
asset base of ` 10.5 trillion as at December 31, 2017.
Company offers its retail customers a wide range of products and services in
equities, derivatives and research, and also distribute various third-party
products including mutual funds, insurance products, fixed deposits, loans,
tax services and pension products. Moreover, it also offer s its customers
a wide variety of advisory services, including financial planning,
equity portfolio advisory, access to alternate investments, retirement
planning and estate planning.
 Continue…
Company provides domestic and foreign institutional investors with brokerage
services, corporate access and equity research. Its Investment banking business
offers equity capital markets services and other financial advisory services to
corporate clients, the government and financial sponsors.
Retail brokerage and distribution businesses are supported by nationwide
network, consisting of over
 200 own branches,
 over 2,600 branches of ICICI Bank through which electronic brokerage
platform is marketed and
 over 4,600 sub-brokers, authorised persons, independent financial associates
and independent associates as at December 31, 2017.

The ICICI Group includes the largest Indian private-sector life insurance
company by retail weighted received premiums, the largest Indian private-sector
general insurance company by gross written premium, each in fiscal 2017, the
largest Indian asset management company by average AUM in India for the
quarter ended December 31, 2017 (Source: AMFI), and other companies involved
in home finance, private equity, primary dealership and other businesses.
 ROAD MAP AHEAD
Company’s objective is to achieve a leading market position
in India in the range of businesses that it operates in,
through the following strategies:

 Strengthen Leadership Position in the Brokerage Business

 Strategically Expand Financial Product Distribution
Business Through Cross-Selling
 Continue Investing in Technology and Innovation
 Diversify Revenue Streams and Continue Reducing Revenue
Volatility.
 Leverage Leadership in Equity Capital Markets to
Strengthen Financial Advisory Businesses
 STRENGTHS
 Largest Equity Broker in India Powered by Our
Proprietary Technology Platform: ICICIdirect
 Strong and Growing Distribution Business with an
“Open-Source” Distribution Model.
 Natural Beneficiary of Fundamental Transformation in
the Indian Savings Environment
 Superior Customer Experience through Product and
Technology Innovation.
 Strategic Component of the ICICI Ecosystem
 Leading Institutional Platform
 Strong Financial Performance with Significant
Operating Efficiency
 INDUSTRY OVERVIEW
Indian Economy
According to EIU forecasts, the Indian GDP is expected to grow at an
average of approximately 7.7% (in real terms) between fiscal 2017
and fiscal 2020, which is higher than the expected real GDP growth
rates for China and the world.

Government Initiatives
In the recent past, the Government of India has introduced wide
range of structural reforms that are expected to increase the
economic growth and improve the overall business environment in
India, enhancing productivity and stimulating higher foreign and
domestic investments. Some of the key reforms are demonetization,
Aadhaar programme, GST, recapitalization package of PSBs, the
IBC, financial inclusion, direct benefits transfer, affordable housing
and BMPS. In addition, the Government’s focus on fiscal discipline
through prudent monetary and fiscal policies is expected to result in
sustainable higher growth.
 Continue…
According to CRISIL Research, the smartphone penetration rate in India is
expected to increase rapidly over next few years, reaching 66% by the end of
fiscal 2022. In addition, the share of mobile data subscribers is projected to
increase from 34% in fiscal 2017 to 66% by the end of fiscal 2022. With the
increase in smartphone penetration and faster data speeds, consumers are
increasingly finding digital platforms more convenient.
In addition, as compared to historical trends, the industry has witnessed
significantly higher growth recently, with total AUM having increased at a
CAGR of 40.1% from March 31, 2016 to September 30, 2017, as a result of
increased financial savings and improving investor awareness about mutual
funds as an asset class.
Indian Equity Market
Moreover, the Indian equity brokerage industry revenues are projected to
increase at 15% - 18% CAGR in the next five years and are expected to reach ₹
300 billion by fiscal 2022, driven mainly by the continued uptick in trading
volumes and increasing retail investor participation.

A high share of working population, coupled with rapid

urbanization and rising affluence, is expected to propel the
growth of the Indian financial services sector
 FINANCIAL PERFORMANCE
Total revenues increased from `705.8 crores in fiscal 2013 to ` 1404.23 crores in fiscal
2017 and ` 1344.69 crores in the nine months ended December 31, 2017, representing a
CAGR of 18.8%.

In fiscals 2017 and the nine months ended December 31, 2017, revenue from brokerage
business represented 62.6% and 63.6% of total revenue.

In fiscals 2017 and the nine months ended December 31, 2017, revenues from
investment banking business accounted for 8.4% of total revenue, The revenue
from investment banking business has increased from ` 70.1 crores in fiscal 2013 to
` 119.48 crores in fiscal 2017, at a CAGR of 14.2%, and stood at ` 113.44 crores in the
nine months ended December 31, 2017.

Company’s retail customers accounted for 90.5% and 89.1% of the revenue from
brokerage business in 2017 and the nine months ended December 31, 2017, respectively

Revenues from the distribution business have increased from ` 162.14 crores in fiscal
2013 to ` 350 crores in fiscal 2017 and was ` 328 crores in the nine months ended
December 31, 2017.

PAT stood at ` 338.59 crores and ` 399.09 crores in fiscal 2017 and the nine months
ended December 31, 2017, representing a CAGR of 47.4%.
 Key Highlights
 Company have an established track record of delivering returns to shareholders.
ROE has exceeded 30.0% past two years & for fiscal 2017, ROE stood at 69.2%.

 As of December 31, 2017, had 0.8 million active customers who had traded on the
National Stock Exchange in the preceding 12 months

 Cost ratio has decreased 62.8% in fiscal 2017 to 54.4% in the nine months ended
December 31, 2017

 The Net Asset Value per Equity Share as of December 31, 2017 and March 31, 2017
stood at ` 20.76 and ` 14.99.

 The net worth as on December 31, 2017 stood at ` 668.8 crores.

 As of December 31, 2017, had ` 8,60.71 crores of outstanding short-term borrowings.

 Aggregate contingent liabilities at ` 130.67 crores as on December31, 2017.

SNAPSHOT – CONSOLIDATED
 RISK FOR THE BUSINESS
 The operation of businesses is highly dependent on
information technology and are subject to risks arising from
any failure of, or inadequacies in, IT systems.
 General economic and market conditions in India and
globally could have a material adverse effect on business &
financial condition.
 Reliance on ICICI Bank for many aspects of business
 Extensive statutory and regulatory requirements and
supervision
 Operational risks associated with the financial services
industry
 A significant decrease in liquidity could negatively affect
business and reduce customer confidence.
 VALUATION
ICICI being one of the pioneers in the e-brokerage business in India, along
with its strong brand name, large registered customer base, wide range
of products across asset classes, complimentary advisory services, strong
financial performance, delivering higher ROE, enable it to stand out of the
crowd amongst its peers.

A high share of working population(estimated 90% below the age of 60

by 2020) in India, coupled with rapid urbanization and rising
affluence, is expected to propel the growth of the Indian financial
services sector.

Company’s business looks quite attractive as it has delivered superior

returns but high valuations at current level would fail to provide gain
for short term in the company.
On the upper price band of ` 520 with annualized EPS of H1 FY18, the
stock is being valued at 31.5x .
we recommend to SUBSCRIBE the IPO for long term gains.
 DISCLAIMERS
This Research Report (hereinafter called report) has been prepared and presented by RUDRA SHARES & STOCK BROKERS LIMITED, which does
not constitute any offer or advice to sell or does solicitation to buy any securities. The information presented in this report, are for the intended
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losses arising from the errors of fact, opinion or the dependence placed on the same.

Despite the information in this document has been previewed on the basis of publicly available information, internal data , personal views of the
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relied on as such, as this document is for general guidance only. Besides this, the research analyst(s) are bound by stringent internal regulations
and legal and statutory requirements of the Securities and Exchange Board of India( SEBI) and the analysts' compensation was, is, or will be not
directly or indirectly related with the other companies and/or entities of Rudra Shares & Stock Brokers Ltd and have no bearing whatsoever on
any recommendation, that they have given in the research report

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contents or data contained within this document. Rudra Share & Stock Brokers Ltd and its affiliates are engaged in investment advisory, stock
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We hereby declare, that the information herein may change any time due to the volatile market conditions, therefore, it is advised to use own
discretion and judgment while entering into any transactions, whatsoever.
Individuals employed as research analyst by Rudra Shares & Stock Brokers Ltd or their associates are not allowed to deal or trade in securities,
within thirty days before and five days after the publication of a research report as prescribed under SEBI Research Analyst Regulations.

Subject to the restrictions mentioned in above paragraph, we and our affiliates, officers, directors, employees and their relative may: (a) from time
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