Home >Markets >Mark To Market >Buoyant markets boost Q1 revenues of ICICI Securities

Brokerage firm ICICI Securities Ltd’s strong run in FY21 seems to have extended to the current financial year as well, given the continued buoyancy in equity markets.

ICICI Securities reported a 58% jump in net profit for the June quarter on the back of a healthy 26% rise in revenues. All of the company’s verticals reported healthy revenue growth on a year-on-year (y-o-y) basis. A look at the sequential trend shows that the mainstay retail equities business has managed to remain buoyant and even improved. Revenues grew 30% y-o-y and 8% on a sequential basis.

Retail forms the bulk of the company’s revenue and profits. The increasing participation of retail investors and the growing instance of individuals putting their savings in stocks has meant that brokerages have seen a sharp rise in business. What’s more is that a slew of initial public offerings of shares have also helped brokerages get new customers. Indeed, ICICI Securities added 3.8 lakh new clients in the June quarter, higher than the previous quarter. Of this, a lion’s share was through digital channels of the company.

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Satish Kumar/Mint

This has also helped the company bring down its customer acquisition cost. Analysts expect the brokerage firm to continue to see growth in customer accretion.

“With strong market activities and stabilizing market share post margin norms, we expect the momentum to continue in the ensuing quarters," analysts at Motilal Oswal Financial Services Ltd wrote in a note.

But ICICI Securities makes money not just by adding customers. Clients need to use its services actively to generate revenue. Here, the company ran into some trouble. The proportion of active clients dropped in the June quarter to 71%, but analysts have attributed this to a change in business mix and the fact that customers sourced through the parent ICICI Bank were lower. Nevertheless, the number of active clients increased sequentially.

The brokerage’s distribution business has long been a sore point. Yet again, its distribution business suffered with revenues falling 15% from the previous quarter. The fall is largely due to the regional lockdowns in the wake of the second covid wave, the company has said. In the wake of these, the sharp 94% run-up in shares since April seems excessive.

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