The stock brokerage industry won’t let you down in the medium term: CEO of ICICI Sec

You took to look at the stock brokerage industry with a three-year mid-term perspective, says Vijay Chandok, MD and CEO, in this conversation with ET Now. Edited excerpts:

It was a good quarter for you. Help us understand what were the major highlights and how the business formed across the segments.
It’s been a busy quarter for us. We have had good growth. Revenues increased by about 37% and profits by about 61%. We saw overall growth in equities, distribution business, institutional business and IPOs. All fired and led to this type of growth. The highlight was the fact that the digital efforts we launched early last year continue to gain momentum. Account acquisition gained massively even sequentially. The momentum remains strong. The deal pipeline, especially on the IPO side, also remains quite strong.

How does ICICI Securities plan to capitalize on the retail investment boom?
This may be the start of a new structural trend in the industry due to new entrants in Tier II and Tier III cities. We see a lot of them flooding into the market. If you look at the demographic segmentation of this profile of what I call digital natives, these are young Indians in the 23-28 age bracket. We have nearly 1.5 crore of such Indians arriving every year. They are inherently digitally connected. Unlike the previous generation, they are very comfortable doing digital transactions and also investing in financial assets as opposed to hard assets like gold. This may be the start of a new trend. Given the fact that they are very different from previous generations, it is necessary to be present in their format, their sensitivity and their life to impose themselves in this segment. This is precisely what we strive to do. Digitization is only one step. It will be much more advanced.

How cyclical in nature do you think the rise in business is?
We are 85% traders and 15% institutional. Strategically, going forward, the value driver for us will be the wealth sector. I completely agree with you that business tends to be episodic. You cannot escape this fact. But the value driver for us is wealth and retail, which is much more granular and much more stable. So no matter how the institutional side of the business evolves, our focus is on how we continue to improve the value of the retail market. Although the general belief is that this business is very cyclical, if you were to look at our earnings growth from 2012 to 2021 and break it down into three-year blocks, there isn’t even a single three-year block. where the CAGR was less than 17%. It’s been a decade of performance, where we’ve had our ups and downs.

We must therefore look at this industry with a somewhat medium-term vision. When you have a three-year perspective, this industry hasn’t let you down. From quarter to quarter, there would be cyclicalities that you would have to deal with, depending on how the market moves.


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