ICICI Direct IPO Review

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ICICI Direct IPO

7.9

Company Background

8.0/10

Price Band

7.5/10

Financial Health

8.5/10

Industry Situation

8.0/10

Reliability

7.5/10

Pros

  • Reputed Brand Name
  • Strong Leadership
  • Healthy Financials
  • Better Chances of Allocation

Cons

  • Competitive Industry
  • Average listed peers performance
IPO Name ICICI Direct IPO Newgen Software Technologies Limited IPO
Opening Date 22nd March 2018
Shares Issue Size 77,249,508 77,249,508
Face Value ₹5
IPO Price Band ₹519 - ₹520
Bid Lot 28
Total Bid Amount ₹14,532 - ₹14,560
Listing At NSE, BSE
Retail Allocation 10%
Estimated IPO Size ₹4,009.25 Crore - ₹4,016.97 Crore
Day# No. of Shares Subscribed Shares Subscription %age
Day 1 NA NA
Day 2 NA NA
Day 3 NA NA

 

ICICI Direct Background

ICICI Direct is the leading full-service stockbroker in India and as per the latest records of National Stock Exchange, has an active client base of 5,00,733. At the same time, this Mumbai-based broker has maintained a complaint rate as low as 0.02% as compared to the Industry standard of 0.11%. Not only that, ICICI Direct is the leading stockbroker in India in terms of business revenue as well. That’s a cherry at the top!

The broker was incorporated by ICICI Bank, its parent brand and ICICI Direct has been able to leverage the brand equity to a reasonable level. The foremost reason for ICICI Direct’s success has been the trust factor and the credit built over the last two decades among the bank’s customer base. This full-service broker offers its clients investment services in segments such as Equity, Currency, Mutual funds, IPO and more.

Some of the Unique Selling Propositions of ICICI Direct have been:

  • 3-in-1 Demat account for retail clients
  • A network of 4600 sub-brokers, 200 branches and business partners across different parts of India
  • Free research and share market tips
  • Reasonable performance based trading platforms
  • Services for domestic and international institutional investors offered

At the same time, the broker has been quite open about the potential risks to its business, in the DRHP document submitted to the regulatory body, SEBI. Some of are risks discussed are:

  • General impact on the domestic and international markets can cause corresponding damage to the financial sector, including ICICI Direct.
  • High dependency on ICICI Bank, as the parent brand and any detachment from it, can severely hit ICICI Direct market reputation and trust.
  • There is a possibility that ICICI Direct might not be able to sustain its leadership in the stockbroking space, forever. There is always a chance of technology innovations, market movements, competition upscaling etc.

Now, this bank-based stockbroker is looking to come up with an IPO, actually a mammoth IPO in the range of ₹4,009.25 Crore – ₹4,016.97 Crore based on the potential IPO price band. The IPO is going to be open for retail bidding on 22nd March 2018 and will be open for bidding for the next 3 business days (more on this later).

This IPO is the 3rd listing from the brand as it put itself on the market through 2016 ICICI Prudential Life Insurance IPO and ICICI Lombard General Insurance IPO in 2017.

The book leading managers of this ICICI Direct IPO are DSP Merill Lynch, Citigroup and CLSA India while the IPO registry help is taken from Edelweiss, India Infoline, SBI Capital and Karvy.

ICICI Direct Management

ICICI Direct IPO

Chanda Deepak Kochhar, Chairperson and Nominee Director of ICICI Bank

Chanda Kochhar, a Padma Bhushan Awardee by the President of India, has been associated with ICICI Bank for a long time. She has handled various positions including Director of the board, Managing director, CEO and more.

As far as education is concerned, Chanda Kochhar is a graduate of the University of Mumbai, a management masters holder from  Jamnalal Bajaj Institute of Management Studies, Mumbai. Furthermore, she has an honorary doctorate of laws from Carleton University, Canada. This is certainly one of the most impressive profiles we have ever come across as part of our IPO reviews.


ICICI Direct IPOShilpa Naval Kumar, Managing Director and Chief Executive Officer (CEO)

Adding to the female brigade is the CEO of ICICI Direct, Shilpa Naval Kumar. She is a veteran with the brand of ICICI and has worked in the areas of financial planning, project finance, corporate banking and treasury.  She has been appointed as the CEO of ICICI Direct since 2016 for a period of 5 years.

Academically, Shilpa Naval Kumar post holds a graduate diploma in management from IIM, Calcutta.


ICICI Direct IPO Data Points

Moving ahead, let’s take our discussion towards this upcoming IPO from ICICI Direct now. As mentioned above, the IPO will open up for bidding on 22nd of March 2018 and you can choose to place your bids anytime till 26th March 2018.

The overall IPO issue size is of 77,249,508 shares at a face value of ₹5 and at a price band of ₹519 – ₹520. There are multiple reasons behind choosing this price band specifically. Some of those reasons include:

  • Decent basic and diluted EPS (Earnings per Share) values.
  • More than 77% Average Return on Net Worth (RoNW)
  • Stable NAV of  ₹18.22
  • Firm position against market peers (more on this later)

At the price band of ₹519 – ₹520, you can apply for 28 shares in a lot and then other lots in the multiple of 28 shares only. As a retail investor, you are going to have a maximum bidding limit of ₹2 Lakh. Always remember, you cannot go beyond this limit with a single PAN card. In case you wish to apply for more bids, you may choose to use the demat account on the pan cards of your family members or friends.

The total offered share size constitutes 24% of the company and it puts the overall ICICI Direct business valuation in the range of ₹16,750 crore. This IPO monetary size is in the range of ₹4,009.25 Crore – ₹4,016.97 Crore, making it one of the biggest IPOs of the year already. You can also check the list of upcoming IPOs.

Some quick data points associated with ICICI Direct are (along with their positioning from the industry perspective):

  • EPS or Earnings per share is ₹10.51 (average)
  • PE Ratio at 49.4 (average, can be better)
  • RoNW at 77.47% (Good!)
  • NAV of ₹14.99 (Good!)

The numbers mentioned above are generally seen from the industry perspective and not at an isolated level since then, you do not get a clear picture.

ICICI Direct Financial Performance

Let’s now check the financial health of this company in order to understand whether it is stable enough or is looking for a quick help to get things in order.

Here are the numbers for the last 5 years (and few months from this financial year as well) that talk about ICICI Direct’s revenue, assets, profit and net margin percentage. Each of these metrics has its own story to tell:

 

Now, what do all these numbers imply?

Here are some quick insights:

  • ICICI Direct has been able to optimize its expenses over the last 5-6 years.
  • The growth margin has consistently improved, especially since 2015.
  • The financial year 2018, is all set to become the highest grossing year for this full-service stockbroker

ICICI Direct IPO Objective

Now, let’s understand, why in the first place, ICICI Direct is looking to raise funding for this IPO? Why do they suddenly need a fresh capital of  ₹4,000 plus? What do they plan to do with this huge amount?

It’s going to be a mixed bag.

A reasonable chunk of the funds raised is going to be used by ICICI Bank as it has been recently hit in Dec 2017 quarter from the awe of treasury losses. Another portion is going to be taken up by the stockbroker itself and is to be used in the areas of technology innovations in trading platforms, user experience and customer support.

ICICI already has a prominent trading platform named ICICI Direct Trade Racer, now it is looking to put even more focus on the technology front in order to make trader’s life much easy.

ICICI Direct IPO Events

Here are some of the crucial dates that you need to take care of, in case you are looking to place a bid for this ICICI Direct IPO:

IPO Open Date 22nd March 2018
IPO Close Date 26th March 2018
Finalization of Basis of Allotment 2nd April 2018
Initiation of Refunds 3rd April 2018
Credit to Demat Accounts 4th April 2018
Listing at BSE and NSE 5th April 2018

 

As shown above, the IPO opens up for bidding on 22nd March 2018 and will stay open for 3 days until 26th March 2018. Then most likely by 2nd April, the decision on finalization of allotment will be done which will be followed by shares getting credited to your demat account by 4th April 2018.

In the meantime, in case you do not get any allotment, your blocked money in your bank account (assuming you used ASBA for IPO application) will be unblocked by 3rd April 2018 itself.

Finally, ICICI Direct will be getting listed on NSE and BSE on 5th April 2018.

Here are some pictures from ICICI Direct IPO Press Conference (credits ICICI Direct):

ICICI Direct IPO ICICI Direct IPO

ICICI Direct Contact Information

In case, you are looking to get in touch with ICICI Direct or ICICI bank for any information related to this IPO and so on, you can check with the broker through the following contact details:

Registered Office:
ICICI Centre,
H.T. Parekh Marg,
Churchgate, Mumbai 400 020;
Tel: +91 22 6637 7100; Fax: +91 22 2288 2445

Corporate Office:
ICICI Securities Limited,
Shree Sawan Knowledge Park,
Plot No. D-507, T.T.C. Industrial Area MIDC, Turbhe,
Navi Mumbai 400 705

Contact Person: Raju Nanwani, Company Secretary and Compliance Officer

E-mail: investors@icicisecurities.com

ICICI Direct IPO Recommendation

Before we provide our final recommendation on this upcoming ICICI Direct IPO, let’s take a step back and see some of the positives and negatives from the analysis above:

Positive Side of ICICI Direct IPO

  • A reputable brand name with a backing of a big financial house – ICICI Bank
  • Strong leadership leading the business
  • Decent EPS
  • Big sized IPO, so the chances of getting an allocation is reasonably better

Negative Side of ICICI Direct IPO 

  • IPO fund proceedings not to be completely used in the broker’s expansion plans.
  • Competitive industry
  • Listed peers doing an average job post-debut on the exchange

Nonetheless, this looks to be a certain buy with a horizon of at least 3 to 5 years for a sizable return. Traders looking for short-term quick profit can also apply for the IPO as the issue looks attractive for some quick gain as well. However, don’t hold it for weeks. Either go for a quick dissolution or stay with the fund for a decent duration.


* The recommendation is just our viewpoint and you are advised to check with your financial advisory and/or stockbroker before investing any money in this IPO. A Digital Blogger bears no responsibility in such investments and the corresponding profits/losses.

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