Last Updated on Mar 25, 2024 by KraftPixel
The unfolding drama of ICICI Securities’ delisting from the stock exchanges has hit a fevered pitch, sparking a fierce debate over valuation concerns that could potentially harm minority shareholders/retail investors. The time is now for retail shareholders of ICICI Securities to act and vote.
Table of Contents
Key Highlights of the Delisting Proposal
Under the proposed share swap deal, ICICI securities will stop trading on the exchanges and will be merged with ICICI Bank. ICICI Securities’ shareholders will be compensated with 67 ICICI Bank shares for every 100 shares they hold in ICICI Securities. This strategic decision aims to align the brokerage firm more closely with its parent company, ICICI Bank, thereby leveraging synergies between the two entities.
Shareholding & Voting Details
ICICI Bank holds a 74.77% stake in ICICI Securities. For the delisting resolution to pass, it requires the approval of more than two-thirds of the votes cast by minority shareholders, who collectively hold the remaining 25.23% stake. The focus is on the minority shareholders’ votes to meet this threshold, emphasizing the critical role these stakeholders play in the decision-making process for the delisting proposal
Only minority shareholders of ICICI Securities have the right to vote on the delisting proposal, The voting period was set between March 22 and 26, with a virtual meeting scheduled for March 27 to discuss the resolution further.
Pushback from Retail Investors
Some of the retail investors are voicing strong opposition to the delisting of ICICI Securities, mainly arguing that the proposed share swap ratio unfairly undervalues the company. This collective disapproval is being amplified through social media platforms, with investors highlighting ICICI Securities’ significant growth and profitability since its IPO in 2018. Even AMCs, such as Quant mutual funds have opposed the move citing potential loss to the minority shareholders of the company.
Concerns also extend to the timing of the e-voting process, which coincides with a long weekend, potentially reducing retail shareholder participation.
As per the data reported by the company and available on Tickertape , below are the growth in key metrics of ICICI securities:
| TTM | FY 2018 | Growth | |
| Revenues (Rs Cr) | 4391.87 | 1861.01 | 2.4x |
| Net Profits (Rs Cr) | 1422.84 | 553.43 | 2.6x |
| EPS (Rs) | 44.07 | 17.18 | 2.6x |
At the time of listing, ICICI Securities was introduced at a P/E ratio of about 32x. Currently, for the proposed delisting, the P/E ratio is mentioned to be around 15x, which is based on the evaluation for the swap ratio. This comparison reflects a significant change in the valuation of ICICI Securities from its IPO to the proposed delisting. The sector PE or PE ratio of other companies comparable to ICICI securities is ~20.
Proxy Advisors’ Stance
IiAS and ISS, two prominent proxy advisory firms, have voiced their support for the delisting, citing various financial and strategic benefits. IiAS pointed out that the implied valuation of ICICI Securities was at a premium, both at the announcement and in subsequent days, suggesting a favorable outcome for shareholders. They believe that retaining ICICI Securities as a private entity within ICICI Bank will streamline operations in line with market practices, where banks typically hold their brokerage businesses privately. ISS also highlighted the anticipated synergies from the delisting, such as enhanced customer acquisition and technological advancements, and noted the cyclical nature of the securities business would benefit from the stability offered by being part of a larger banking entity.
How Should Shareholders Cast Their Vote?
All ICICI securities’ shareholders must act now to vote on the proposed resolution. Retail shareholders are integral to a company’s journey, contributing to long-term wealth creation. By participating in the voting process and exercising their rights as shareholders, they play a crucial role in shaping the company’s future and aligning it with shareholder interests.
Follow the instructions below to mark your vote:
1) Visit the official CDSL e-Voting website here
2) Enter your Demat ID and PAN for verification via OTP.
You can find your Demat ID from your respective online broking platforms in the account details section. E.g. For Kite users, Demat ID can be found within the Demat section in Console
3) Select NSDL as ESP (E-voting service provider)
4) Click on e voting link to the right next to ICICI securities under the ISIN name
4) Read the resolution details carefully.
5) Cast your vote by selecting your choice (For/Against/Abstain).
6) Confirm and submit your vote.
As an investment fanatic, I’ve dabbled in early-stage startups, mutual funds, gold, stocks, smallcases, and real estate to identify which assets generate the highest ROI. At Tickertape, I’m dedicated to presenting my learning and providing insightful suggestions to help my readers make sound investment decision.
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