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CLSA
ICICI Sec (Buy)
Target: ₹625
CMP: ₹463.70
ICICI Securities (ISec) reported net profit of ₹278 crore in Q2-FY21, up 108 per cent y-o-y driven by robust revenue growth across lines aided by strong capital markets. I-Sec has seen high customer acquisitions from non-ICICI channels as the active ramp-up of its partner network through open architecture has started to yield results.
We expect this high growth to continue over the next few years. We believe ISec is a digital, financial powerhouse and best-placed to take advantage of India’s savings and financial product distribution growth. It’s high ROE of over 50 per cent, strong balance sheet, market leadership and strong management warrant a valuation premium.
ISec has seen a sharp increase in non-ICICI Bank channel for customer acquisitions due to its open architecture and active ramp up of partner networks. In Q2-FY21, ICICI Bank’s share of customer acquisitions was 55 per cent vs 80 per cent in FY20. Active NSE clients in Q2-FY21 were up 32 per cent y-o-y at 1.2 million.
We believe ISec continues to evolve its financial offerings with multiple digital initiatives and new focus areas/products, such as Insta loans and open architecture in the health segment.
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