Informist, Saturday, Jan 20, 2024
MUMBAI – ICICI Securities Ltd has given an uncertain outlook for the broking and securities services industry for the short term due to global headwinds and the General Election in India. The brokerage firm, however, retained a positive outlook on medium-term to long-term prospects.
At an investor call following its Oct-Dec earnings announcement on Tuesday, the brokerage firm’s Managing Director and Chief Executive Officer Vijay Chandok said the stock market was at an all-time high with “so much volume happening.” But “to expect growth from here would be not right in my view and I strongly feel so,” he said.
The brokerage firm, therefore, sounded a “note of caution” on its growth prospects going forward.
ICICI Securities’ income from operations rose just 5.9% on quarter to 13.22 bln rupees in Oct-Dec, showing a slip from the 34% sequential growth in the September quarter and nearing the 5.6% growth level of the June quarter. The net profit was up in
single digits, by 9.7% on year, at 4.65 bln rupees.
However, compared to the same quarter a year ago, the performance of the brokerage firm was strong. Income from operations jumped 50% on year, the highest rise in the last eight quarters. The net profit too rose substantially by 67% on year, the highest in 11 quarters.
ICICI Securities’ equity revenue jumped 63% on year in Oct-Dec, while the derivatives revenue rose 24%. The brokerage’s retail cash market share expanded by 160 bps to 13.1% as compared to a year ago, while its retail derivative market share contracted by 40 basis points to 3.4%.
Chandok said the brokerage firm’s focus was on revenue-generating areas of its business, but the “market trends tend to go a lot on those parameters which may not necessarily be revenue-generating directly.”
He said that the cautionary note was “a reflection of changes in the market sentiment, outlook, volumes that are taking place.” According to Chandok it was not “prudent to strike an optimistic note when things have already gone up so much.” The brokerage has to keep asking the question ‘Will this thing go on?”, Chandok said.
The ICICI Securities MD also noted that on the equity cash market side the firm had already “done a lot” and it was now “just about… retaining customers, providing better service, (and) better experience.” The brokerage had “very little further enhancements on the plan and anvil,” Chandok said.
ICICI’s active clients’ market share was at 5.3% as on Dec 31 compared to 5.7% on Sep 30. Its market share in the commodity derivatives segment contracted to 7.5% in Oct-Dec from 7.8% a year ago.
The brokerage firm’s equity revenue growth was aided by a 69% interest income to 2.69 bln rupees in Oct-Dec and this was primarily due to increase in average margin trading funding book and the yields from it. End
Reported by Rajesh Gajra
Edited by Vandana Hingorani
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