ICICI Securities IPO opens to weak response, subscribed 0.29 times

By: | Updated: March 23, 2018 3:58 AM

The initial public offer (IPO) of ICICI Securities, the stockbroking arm of ICICI Bank, was subscribed 0.29 times on Thursday, the first day of the three-day offer with investors bidding for 1.30 crore shares against 4.42 crore shares reserved for them.

ICICI Securities, IPO, ICICI Bank, National Stock Exchange, Retail brokerage business, ICICI Lombard General InsuranceICICI Securities services include brokerage, financial product distribution, and investment banking. (Reuters)

The initial public offer (IPO) of ICICI Securities, the stockbroking arm of ICICI Bank, was subscribed 0.29 times on Thursday, the first day of the three-day offer with investors bidding for 1.30 crore shares against 4.42 crore shares reserved for them. Qualified institutional buyers bid for 0.49 times the shares offered to them, high net worth individuals bid for 0.04 times their allocation, retail investors 0.22 times and shareholders 0.09 times. ICICI Securities, has priced its initial public offering between Rs 519 and Rs 520 per equity share. The company plans to sell up to 7.72 crore shares. When calculated at the upper band, the offer could garner Rs 4,016 crore.

The offer will close on March 26. Investors can apply for a minimum of 28 shares and multiples of 28 thereof. The 100% offer-for-sale constitutes 23.98% of the post-offer paid-up capital of the company. ICICI Securities services include brokerage, financial product distribution, and investment banking. The company focuses on both retail and institutional clients. According to a Crisil report, ICICI Securities has been the largest equity broker in India since FY 2014 by brokerage revenue and active customers in equities on the National Stock Exchange. Retail brokerage business, accounted for 90.5% of the revenue of its brokerage business in FY 17.

As of December 31, 2017, ICICIdirect, the company’s proprietary electronic brokerage platform, had approximately 3.9 million operational accounts of whom 0.8 million had traded on NSE in the preceding 12 months. Since inception, ICICI Securities has acquired a total of 4.6 million customers through this platform as of December 31, 2017. The company posted a profit after tax for the nine months ended December 31, 2017 Rs 399.09 crore, a rise of 56.5% from the same period during the previous year.

For the year ended March 31, 2017, ICICI Securities posted a net profit of Rs 338.59 crore. The company posted earnings per share of 10.51 for the year ended March 2017, based on this the price to earnings of the company comes to 49.47 at the upper band of the offer price. ICICI Bank had got listed in 1998. ICICI Prudential Life Insurance, its life insurance arm, got listed in September 2016 through a Rs 6,056-crore public offering. ICICI Lombard General Insurance went public in September 2017.

Some market participants have expressed concerns about the pricing the issue.  In a note to investors, Centrum Research said, “Given the high valuations, investors can subscribe to the issue from a long term perspective. It must be noted that since the issue is being offered at expensive valuation, listing gains may be capped,” the note said. Further the note said the business of ICICI Securities cannot be exactly compared to other brokerages due to their vast digital footprint that aids maximum revenue for the company compared to other brokerages, which rely more from branch-based business. ICICI Securities joins a long list of companies that have raised funds from the market in the recent past. In 2017, 36 companies raised `67,147 crore through IPOs. Listing gains and the positive sentiment in the market are among the reasons attributed to the trend.

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