The board of ICICI Securities will meet on June 29 to consider delisting of shares of the company, it informed the exchanges.
“A meeting of the board of directors is scheduled to be held on Thursday, June 29, 2023 to consider a proposal for delisting of equity shares of the company pursuant to a scheme of arrangement with ICICI Bank Ltd, listed holding company,” the company said.
Promoter ICICI Bank held 74.85 per cent stake in the retail and institutional broking arm as of March 2023.
The board’s decision comes after shares of ICICI Securities surged 8.9 per cent intraday on Friday to a high of Rs 572.70 on the NSE. Following the news, the stock opened at a 52-week high of Rs 647.00, 15 per cent higher compared to Friday’s close.
In April 2018, ICICI Securities’ Rs 4,000-crore IPO had received a poor response and was undersubscribed by 78 per cent. The stock listed below its issue price of Rs 520 and since then has mostly underperformed the benchmark indices.
“In a voluntary delisting offer, the stock usually reacts positively on an assumption of higher exit price to shareholders, determined through a reverse book-building process,” said Prashanth Tapse, Senior VP (Research), Mehta Equities, adding that as per Friday’s close, the stock was trading above the issue price,
The company has been struggling due to high revenue dependence on broader equity markets and cash volumes, even as broking revenue has declined sharply due to lower primary issuances, analysts have said. The company has been trying to diversify its revenue through tools and products for the derivatives and margin trading fund (MTF) segments, and increased distribution of other financial services such as loans and insurance.
ICICI Securities reported a consolidated net profit of Rs 263 crore for Q4 FY23, down 23 per cent on year. Revenue from operations for the quarter was Rs 885 crore, against Rs 892 crore in the year-ago period. The income from interest was Rs 287 crore, up 35 per cent YoY, while brokerage income stood at Rs 310 crore.
Retail broking revenue declined 19 per cent YoY to about Rs 260 crore in Q4 FY23. However, the retail cash segment market share improved 105 bps to 11 per cent, while the derivatives segment market share expanded 32 bps to 3.6 per cent, Motilal Oswal Securities said in April.