As of the quarter ending September, ICICI Bank held a 74.79 percent stake in ICICI Securities. In the previous session, the ICICI Bank stock closed marginally higher at Rs 936.50 on the National Stock Exchange (NSE), while ICICI Securities ended 2.78 percent higher at Rs 659.
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“ICICI Securities is a low capital consuming business and the internal accruals are more than adequate to fund business growth. ICICI Bank is not expected to be required to make additional capital infusion into the company,” ICICI Bank had said while explaining the rationale behind the decision.
Following the announcement, ICICI Securities said that it would delist to become a wholly-owned subsidiary of the parent.
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The decision to delist comes five years after ICICI Securities debuted on the bourses. “With ICICI Securities as a 100 percent subsidiary, it is expected that both entities would be able to better capitalise on the synergies in line with the Customer 360 focus of the bank,” ICICI Bank had said on June 26.
The securities broking business is inherently cyclical as it is significantly dependent on the macro-economic environment and buoyancy in the equities market. This was another reason cited behind the delisting move.
So far this year, the ICICI Bank stock has risen around 3 percent, underperforming the Nifty, which has rallied around 6.5 percent during the time. ICICI Securities has outperformed the benchmark index, rallying more than 33 percent.
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ICICI Bank is among Prabhudas Lilladher’s top Diwali stock picks. The brokerage has a “buy” rating on the stock with a target price of Rs 1,280 in view of its robust financial performance. The bank’s balance sheet is characterised by a decreasing share of lower-rated assets, provisions at 1.2 percent, and capital adequacy ratios (CAR/CET-1) of 17.6 percent and 16.8 percent, it says.
The core return on assets (RoA) and return on equity (RoE) for FY25/26 are estimated to be 2 percent and 17 percent, outperforming competitors like HDFC Bank, Prabhudas Lilladher has said. The stock trades at attractive valuation multiples with a price-to-core adjusted book value (ABV) ratio of 2.2x/1.9x for FY25/26, presenting an attractive investment opportunity, it adds.
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