ICICI Securities Ltd Q4 FY22 Earnings Conference Call Summary

Key highlights from ICICI Securities Ltd (ISEC) Q4 FY22 Earnings Concall

Q&A Highlights:

• Kashyap Javeri from Emkay Investment asked about the budgets that were 2x compared to FY21. Harvinder Jaspal CFO said that the 2x budget were for technology spend which has been growing and it was higher by 70% in FY22. And for FY23 it’s 2.5 times vs. FY22.

• Prayesh Jain from Motilal Oswal asked that on the corporate finance side what is the share of the recurring segment and outlook of it. Harvinder Jaspal CFO answered that ISEC has a dominance in the equity capital market with a 70% market share last year. ISEC has invested on building up on the advisory side, which is the private equity M&A for which ISEC is seeing traction.

• Prayesh Jain from Motilal Oswal also asked that on the MTF book, with market volatility increasing, would ISEC take a call to reduce the lending on this side of the book. Harvinder Jaspal CFO said that MTF is a product strategically the company has been focusing on. Going forward ISEC will endeavor to focus on this product with diversification of the theme and broad basing and want to scale it up further.

• Prayesh Jain from Motilal Oswal asked about the quantum of ESOP funding seen next year. Harvinder Jaspal CFO answered that ESPO funding right now is roughly about INR 1,400 crores out of the total INR 7,500. Next year, ISEC expects it to have a bit of a slow wind-down because of the regulatory changes, probably half of INR1,400 crores.

• Aditya Jain from Citigroup enquired about the break-up of INR373 crores of brokerage revenue into retail and institutional. Harvinder Jaspal CFO replied that looking at retail brokerage for 4Q22, it’s about INR325 crores for retail brokerage and institutional brokerage would be INR48 crores, which is brokerage income. Total retail equity revenue is about INR 521 crores, including allied.

• Karthik Sahni of Mirae Asset Management queried about cost-to-income, given it’s 49% right now and target being around 40%. Harvinder Jaspal CFO answered that FY23’s 2.5 times spend vs. FY22 will enhance ISEC’s cost-to-income ratio maybe for the next year. ISEC added that higher operating leverage vs. today might go through a slight increase before it starts coming down.

• Sahej Mittal from HDFC Securities asked about the number of orders executed on an average in a single day on the IDIRECT markets app. Harvinder Jaspal CFO replied the company has not put out the number of orders on this. Within due course, ISEC added, it would keep on adding to the disclosures.

• Sahej Mittal from HDFC Securities asked about the marketing spend in 4Q22 and FY22 and the target for FY23. Harvinder Jaspal CFO replied that marketing spend for 4Q22 was about INR30 crores. ISEC is spending on above-the-line marketing as well as digital marketing, etc. And for FY22 it was about INR100 crores. For FY23, there will be growth in expenses.

• Sahej Mittal from HDFC Securities also asked what would be the hit on the P&L of the tech spend in 4Q and FY22. Harvinder Jaspal CFO said that for P&L, which is operating expense, it would be of the order of about INR20 crores to INR25 crores for 4Q22 and for FY22 about INR80 crores.

• Sanketh Godha from Spark Capital asked about the reason prime income per customer in 4Q22 substantially increasing from INR770-odd to INR1,050-odd. Vishal Gulecha EVP answered that the reason is the company has acquired more number of high-value customers from market. Also customers of INR299 plan who did less volume with ISEC is now willing to switch to superior plans.