Axis Securities
ICICI Securities (Buy)
Target: ₹870
CMP: ₹751.60
With a market share of 8.4 per cent in FY21, I-SEC stands as the fourth largest broker amongst the active clients in NSE despite increased competition from the discount brokers. By leveraging its strong digital platform, the company endeavours to become a comprehensive solutions provider and cater to the various needs across the investors life cycle comprising of investment, protection, and borrowing.
While the Covid-19 has front-loaded opportunities in the capital market, the broking industry continues to consolidate in favour of digital and larger players.
We believe I-SEC is well-placed as the industry leader and we expect its growth to be driven by (1) Long-term industry tailwinds; (2) Limited revenue cyclicity owing to the diversified product basket as well as its efforts to further diversify revenue stream; (3) Improving customer sourcing and activation through proactive use of the digital platform; and (4) Improving profitability due to its cost rationalization efforts.
Additionally, I-SEC is ensuring its growth by undertaking various initiatives to improve customer engagement and activation as well as increase monetization of customers’ wallet shares. This cements our confidence in the company’s bright prospects over the long term which is reflected in our target multiple of 19x Sept’23E EPS.
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