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HDFC Securities
ICICI Securities (Buy)
CMP: ₹298.60
Target: ₹352
ICICI Securities (I-Sec) is one of the strongest retail investing platforms for direct equities (9.2 per cent volume market share). The company has retained its market leadership position despite intense competition. I-Sec has also built a strong financial products distribution business (26.2 per cent of revenues). We believe that ISEC will be a key beneficiary as financialisation of savings grows.
Over time I-Sec has transformed itself from being just a broker to a distributor of financial products — 22.8 per cent of revenues in FY13 to 26.2 per cent in FY18. Given the recent reduction in TER of mutual funds, we expect overall growth in distribution revenues at 9.5 per cent pa over FY18-21E to ₹610 crore and contribute 27.9 per cent to total revenues.
Key risks: Macro slowdown in household savings, decline in broking volumes or yields, a higher than anticipated pick up in direct investing or further changes in commission payment regulations for mutual funds or insurance companies.
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