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ICICI Securities Identifies Two Areas To Diversify Outside Equity Markets

Two areas ICICI Securities plans to diversify into.

A Rupeek Fintech Pvt. agent uses the company’s mobile app while processing a customer’s gold loan application at their home in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)
A Rupeek Fintech Pvt. agent uses the company’s mobile app while processing a customer’s gold loan application at their home in Mumbai, India (Photographer: Dhiraj Singh/Bloomberg)

While ICICI Securities Ltd.'s business was not impacted by the Covid-19 lockdown, the financial services provider has identified two areas to diversify outside of the equity markets, according to its managing director.

These are insurance services and distribution of loan products, Vijay Chandok told BloombergQuint. They are not linked to the stock markets and are large and under-penetrated categories, he said. “Our endeavour is going to be largely in digital delivery.”

ICICI Securities’ revenue rose 13 percent year-on-year to Rs 482 crore in the quarter ended March. It was aided by a 35 percent jump over a year earlier in the revenue of retail equities and allied business at Rs 292 crore.

“The challenges which other businesses face in terms of supply chain, delivery, and manufacturing don’t impact us in current times,” Chandok said. “We are a zero-inventory company; delivery is all digital and we don’t need a physical infrastructure; and we have low to zero receivables on our balance sheet as we collect money upfront. We are a cash-rich company with a high return on equity and operating leverage.”

The company strengthened partnership with parent ICICI Bank Ltd. to offer broking accounts to affluent customers, acquired clients digitally and has tied up with over 9,000 partners, according to Chandok.

The partnership with ICICI Bank entails revenue sharing and new product offerings. “The sharing part happens for only two years after which the earnings come to us,” he said. “We expect this to be an accretive arrangement that will add to our base year on year.”

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