My Best Pick 2020

Stocks are down, but Harendra Kumar’s top pick is a stock broker

ICICI Securities has a strong moat, thanks to its distribution reach and a strong product offering

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Published a year ago on Apr 09, 2020 10 minutes Read
Faisal Magray

ICICI Securities (I-Sec) is one of the largest and oldest equity brokers in India and ranks number one with an overall retail client base of 4.7 million, and number two by active client base with 10% market share and number two in market volume with a 9% blended market share — its retail volume share is higher than its blended share. While the advent of discount brokers has dented margin, I-Sec is still the number two by revenue market share, with a CAGR of 14% over FY14-19.

I-Sec is a full-scale broker and provides research, margin funding and a full bouquet of other financial products including mutual funds, life and general insurance, and third-party loan products. The leadership position extends even to the distribution piece, where I-Sec is the second-largest non-bank distributor with a market share of 4% as on FY19, as per AMFI. The capital markets business remains its crown jewel, with I-Sec being number one domestic financial advisor by revenue for FY19, as per Prime Database.

The moat
As a subsidiary of one of the largest private banks in India, the ICICI brand provides customers the trust, especially given the recent incidents surrounding client asset misappropriation, with client’s custody sitting with the bank. I-Sec has been an innovator from the start, with being the first to provide eATM facility to all clients, where up to Rs.500,000 is transferred to all clients within half an hour against industry practice of T+2 (transfer day plus two) working days. I-Sec still has a sizeable customer base above the 40-year age bracket, which is considered sticky and a segment that has been difficult to crack by discount brokers.

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