ICICI Securities (ISEC) Q4 19/20 earnings summary

Executive summary

• FY2020 consolidated revenue was ₹17,249.4 million, broadly flat YoY; PAT rose 10.4% to ₹5,420.0 million, supported by lower tax expense and a 10% rise in institutional equity revenue.

• Strategy shifted toward a broader digital marketplace covering investments, protection and borrowing, with priorities spanning scale, client monetisation, experience, digital agility and cost efficiency.

• Q4 FY2020 revenue grew 13% YoY, led by over 32% growth in equity and allied business; full-year performance faced COVID-19 disruption and sharp market declines.

Financial highlights

• Consolidated revenue ₹17,249.4 million vs ₹17,270.2 million in FY2019; PAT ₹5,420.0 million vs ₹4,907.3 million, up 10.4%.

• PBT was ₹7,529.3 million, down 0.6%; total expenses rose 0.2% to ₹9,720.1 million, while PAT benefited from tax expense falling 20.9% to ₹2,109.3 million.

• Consolidated EPS was ₹16.83 basic and ₹16.81 diluted; net profit margin was 31.4%, ROE 48%, and dividend payout ratio 65%.

• Revenue grew 13% in Q4 FY2020 YoY; retail equity non-brokerage income reached 14% of revenue vs 9% in Q4 FY2019.

• Excluding two one-off impacts, like-for-like non-finance expenses declined 6.5%; reported non-finance costs fell 3%.

Outlook and guidance

• Near- and medium-term performance depends heavily on COVID-19 duration and the pace of economic recovery; management expected a challenging immediate outlook and modestly improved sentiment in H2 FY2021.

• Priorities include accelerating digital product availability, enhancing cost efficiency and operating leverage, and investing in analytics, CRM, cybersecurity and customer-facing technology.

• FY2021 Indian growth was expected to contract, with a potential robust recovery in FY2022 supported by stimulus and pent-up demand.

• Long-term opportunity rests on rising financialisation of savings, digital adoption, underpenetrated financial products, wealth growth and a strong IPO pipeline.