ICICI Bank is the one who set up ICICI Securities. As of March 31, the private loan owned 24,16,52,692 shares, or a 74.85% stake, in the brokerage firm.
After going up more than 22% in the last four trading days, ICICI Securities shares were sold for a profit before the company’s board met on Thursday to talk about a plan to delist the company’s shares as part of a deal with ICICI Bank. On BSE, shares of ICICI Securities fell 2.76 percent to Rs 605.10. The scrip went up by 10.38% on Monday and by 7.144% on Friday.
Prashanth Tapse, Senior VP (Research) at Mehta Equities, said, “In a voluntary delisting offer, the stock usually responds positively on the idea that owners will get a better exit price, which is figured out through a process called “reverse book building.” If we look at the past, we can see that the Rs 4,000 crore initial public offering (IPO) in April 2018 didn’t do very well.
Only 78% of the shares were sold during the three-day selling process. On the day it was listed, it was listed for less than what it was sold for, and since then, it has mostly done worse than benchmark averages.
The moment, in the opinion of ICICI Securities, is ripe to make a judgement about this corporate action. It would be challenging to guess the actual justification for such a startling management choice,” Tapse remarked.
The ICICI Bank is behind the brokering company. As of March 31, the private loan owned 24,16,52,692 shares, or a 74.85% stake, in the brokerage firm. The brokerage firm was owned by foreign institutional investors to the tune of 8.65%, insurance companies to the tune of 3.14, and mutual funds to the tune of 1.03. 7.69% of the company is owned by small buyers who owned up to Rs 2 lakh worth of ICICI Securities stock.
Analysts said that ICICI Securities has had a hard time in recent years because so much of its income comes from the wider stock markets. Motilal Oswal said that this has led to a sharp drop in brokerage income because it has become more dependent on cash flows.
Still, things have been stable for the past two quarters. Motilal Oswal Securities said in April that a volatile stock market has made it hard for new companies to raise money.
“ICICI Securities is now taking steps to broaden its income by releasing a number of tools and goods for the derivatives market. In addition, the company is putting more effort into getting more of its users to use MTF. The launch of new goods for sale, like loans and general insurance, will boost income in the long run. In terms of costs, ICICI Securities will keep investing in people and technology, the company said.
For the March quarter, ICICI Securities’ income from retail trading fell 19% year over year to about Rs 260 crore. Motilal Oswal Securities said in an April note that its retail cash segment market share grew by 105 basis points year over year to 11%, while its futures segment market share grew by 32 basis points year over year to 3.6%.