In the markets carnage, there are several stocks that have fallen to 52-week lows. Here is a stock from the ICICI Group stable that has halved in value from record highs.
ICICI Securities – A drop in share price to new 52-week low
ICICI Securities Limited (I-Sec) is a subsidiary of ICICI Bank Ltd. The company operates icicidirect, which provides investments, protection, and borrowing. Through its four lines of businesses -- broking, distribution of financial products, wealth management, and investment banking-- I-Sec serves customers ranging from the retail and institutional investors to corporates to high net-worth individuals to government.
In the market meltdown there are many good quality, well managed companies where the stock has lost heavy ground. One such stock is ICICI Securities. The shares have fallen from 52-week highs of Rs 895 to A 52-week low of Rs 409. The stock currently trades at Rs 419.
|52-week high||Rs 895.60|
|Current market price||Rs 419|
|52-week low||Rs 408|
|Drop from highs||53%|
Along with the markets the stock of ICICI Securities has dropped significantly, which is one of the reasons to recommend buying the stock at the current levels. In fact, the idea is to buy stocks at the right price and stop chasing them at higher prices.
Decent dividend yields on the stock of ICICI Securities
The stock also gives a good dividend yield as the Board of Directors of the Company at its Meeting held in April, approved the recommendation of final dividend of Rs. 12.75 per share. Now, let's assume you buy the shares at the current market price of Rs 419, the dividend yield also works to more than 3%. That is not bad at all. Apart from this we believe that the company would do well going ahead looking at the solid franchisee and brand name and also the fact that India's demographics favour a huge possibility of new accounts being opened and investors putting more money into stocks. Given the fact that it is largely a broking house, there are no inflationary pressures that are likely on margins.
Buy the shares of ICICI Securities as they seem fundamentally sound
The company has a much better FY 2022, than FY 2021. Net profits at the company for FY 2022 were at Rs 18497.8 million, as against Rs 14307.7 million reported in FY 20221. Overall, the company reported an EPS of Rs 42.77 for FY 2022. Now, if you take the current market price of Rs 419, the stock is value at less than 10 times. For a business that is likely to grow and had a good brand equity, we believe that the stock should have better discounting. Nonetheless, the markets are in such a shape that stocks are being beaten down as interest rates are heading higher. While stock markets are being sold into on account of sentiments, they have thrown-up opportunities for long-term investors. However, we wish to inform readers, that there are very few stocks that do not move in tandem with the markets. So, if the markets fall, there is a possibility that the stock of ICICI Securities would also. But, what makes the stock a good buy is the sharp fall from higher levels, a good dividend yield, strong brand equity and a growing market.