Amit Kumar of Unifi Capital presented his investment thesis on ICICI Securities (India: ISEC) at Asian Investing Summit 2021.

Thesis summary:

ICICI Securities is a subsidiary of ICICI Bank, which owns 75% of ISEC. The latter commenced operations in 1995 and went public in 2018. ISEC operates ICICI Direct, an online financial supermarket, meeting the three need sets of clients: investments, insurance, and borrowing. ISEC has four business divisions: broking, distribution of financial products, private wealth management, and investment baking.

In all business divisions, a long runway of growth exists due to the financialization of savings in India, as the low interest rate environment makes equities and mutual funds relatively more attractive. Demographic trends are favorable in India, as young people constitute a major portion of the workforce.

The business model is asset-light, requiring minimal capex and no inventory. The company generates strong FCF, a major portion of which is paid out as dividends as the business does not require capital for growth. ISEC aims to digitize processes and develop technology tools. The company is likely to benefit from industry consolidation and gain market share. Amit expects consistent earnings growth and sustainably high returns on equity.

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About the instructor:

Amit Kumar, CFA has twelve years of experience in financial analysis, investment research, and corporate banking. He focuses on researching mid- and small-cap stocks in the Indian market. He looks for sustainable earning growths. He holds an MBA (finance) degree from XLRI Jamshedpur. His graduation was in the field of production engineering from NIT Trichy, a top engineering colleges in India. Apart from investment research, his hobby is long-distance running. He is part of Striders, a leading running club in Mumbai and has completed dozens of half marathons. He also completed the Amsterdam marathon in less than five hours. Next, he is eyeing the Comrades ultra-marathon in South Africa.

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