ICICI Securities shares jump 15%, ICICI Bank gains nearly 1% as board mulls delisting brokerage firm stock

ICICI Securities shares jump 15%, ICICI Bank gains nearly 1% as board mulls delisting brokerage firm stock:

ICICI Securities, a brokerage firm, experienced a significant surge in its share price. It jumped 15% to reach Rs 650, marking a 52-week high. This surge was triggered by an announcement made by ICICI Bank regarding the consideration of a proposal for the delisting of ICICI Securities’ stock.

Simultaneously, ICICI Bank, the parent company of ICICI Securities, witnessed a modest increase in its own share price. It rose by 0.7% to reach Rs 930.15. As of March 31, ICICI Bank held a substantial stake in ICICI Securities, amounting to 24,16,52,692 shares, representing a 74.85% ownership.

However, despite the positive news regarding ICICI Securities’ share price and ICICI Bank’s share price increase, ICICI Securities reported a decline in its consolidated net profit. For the quarter ended in March, the brokerage firm’s net profit stood at Rs 263 crore, which marked a decrease of 23% compared to the corresponding period in the previous year when it reported a net profit of Rs 340 crore.

Despite the decline in net profit, ICICI Securities’ stock has seen a notable upward trend over the past month and year. In the last one month alone, the stock has jumped by 23%. Furthermore, over the course of the last year, the stock has witnessed an impressive increase of over 40%.

It’s important to note that the stock market is subject to volatility and can be influenced by various factors, including market sentiment, company performance, economic conditions, and news announcements. Therefore, investors and stakeholders are advised to refer to the latest financial reports, market updates, and expert analysis for accurate and up-to-date information.

ICICI Bank has announced that a Board of Directors meeting is scheduled to take place on June 29, 2023. The purpose of the meeting is to discuss several matters, including a proposal for the delisting of equity shares of ICICI Securities Limited.

ICICI Securities is a subsidiary company of ICICI Bank and is listed on the stock exchange. The delisting proposal will be considered under the provisions of Chapter VI, Part C, Regulation 37 of the SEBI (Delisting of Equity Shares) Regulations, 2021.

The statement from ICICI Bank indicates that the bank is considering the possibility of delisting ICICI Securities from the stock exchange. Delisting refers to the process of removing a company’s shares from trading on a stock exchange, making them no longer available for public trading. The proposal for delisting is likely to involve a scheme of arrangement between ICICI Bank and ICICI Securities.

The specific reasons for considering the delisting proposal are not mentioned in the provided statement. However, delisting decisions are typically influenced by various factors, including the company’s strategic objectives, market conditions, and the benefits and implications of being a publicly traded entity.

It is important to note that delisting decisions can have significant implications for shareholders and the market as a whole. Shareholders may be offered an exit opportunity or compensation based on the delisting offer price. Delisting can impact the liquidity and marketability of the company’s shares, as they will no longer be traded on the stock exchange.

According to Manish Chowdhury, the Head of Research at StoxBox, since its debut in April 2018 with an issue price of Rs 520 per share, ICICI Securities’ stock has largely underperformed in the broader market. The reasons for considering the delisting proposal are not explicitly mentioned, but it is worth noting that the stock is currently trading above its issue price after a long period.

The last time ICICI Securities experienced a notable upswing was during the COVID-19 period when its share price increased significantly due to strong financial performance. However, challenges lie ahead for the company. The broking industry faces increasing competition, and ICICI Securities has limited visibility in terms of new account openings. This suggests that the path forward may be challenging.

Furthermore, the changing dynamics within the industry have impacted ICICI Securities’ business performance in recent quarters. The company has experienced almost stagnant growth in its topline, indicating a lack of significant revenue growth. Additionally, there has been some moderation in profitability, which may be attributed to various factors, including evolving industry dynamics.

The insights provided by Manish Chowdhury highlight the difficulties ICICI Securities has faced since its debut and the challenges it may encounter in the future. These challenges include increasing competition and limited visibility in terms of new account openings, as well as the company’s recent business performance.

It’s important to note that the opinions expressed by Manish Chowdhury are based on his analysis and expertise as the Head of Research at StoxBox. Investors and stakeholders should conduct thorough research and consider various factors before making any investment decisions. Market conditions and company performance can change rapidly, so it’s advisable to consult with financial professionals and stay informed about the latest developments.