Buy This Brokerage Stock For A 25% Upside

Broking firm Motilal Oswal is betting on the stock of ICICI Securities for good long-term returns. The firm has set a price target of Rs 780 on the stock as against the current market price of Rs 629.

Retail broking segment revenue up

ICICI Securities reported a 6% YoY and 7% QoQ decline in revenue from the Retail Broking segment. It was form the eighth consecutive quarter, revenue has been in the Rs 3-3.5billion range.

"Its customer count saw a 1.5x jump. While its Prime subscription fees has scaled up (up 71% YoY), its share in overall revenue is small. Revenue for the Issuer Services segment fell 41% QoQ to Rs 649 million. Overall revenue grew 20% YoY to Rs 8.9 billion (inline) as the negative surprise in Issuer Services was offset by a beat in the Distribution segment. Net profits at Rs 3.8 billion (+42% YoY) was 6% lower than our estimate, while C/I ratio rose 410bp QoQ to 49% on higher marketing costs and technology investments," ICICI Securities has stated.

Target price of Rs 780.

Motilal Oswal has lowered its FY23/FY24 EPS estimate by 10% each, to factor in weaker-than-expected traction in the Broking segment, a slowdown in the Issuer Services segment, the impact of a run-down in the ESOP funding book, and higher costs.

"We maintain our Buy rating on the stock with a revised target price of Rs 780 (based on 17x FY24E P/E), implying a potential upside of 24%," the brokerage has said.

New customer additions

ICICI Securities added 618k new customers in 4QFY22 v/s 676k QoQ. Its Prime plan saw 90k customer additions as compared to 100k in 3QFY22.

Its market share in the Retail Cash segment improved by 30bp QoQ to 10.1%, while the same in the Derivatives segment contracted 20bp to 3.3%.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.