In Wednesday’s trading session, the shares of a company engaged in the business of retail and institutional broking fell 7.8 percent to Rs. 783.05 on BSE, following NCLT Mumbai’s approval of the delisting proposal despite the opposition of shareholders.
With a market capitalisation of Rs. 25,788.7 crores, at 03:02 p.m., the shares of ICICI Securities Limited were trading in the red at Rs. 788.8, down by 7.2 percent, as against its previous closing price of Rs. 849.15.
What’s the News:
In June 2023, ICICI Securities announced plans to delist and merge with its parent company, ICICI Bank. On June 29, 2023, the ICICI Bank board approved the plan.
By March 2024, the delisting plan received approval by minority shareholders with 71.98 percent voting in favour.
On August 21st, the Mumbai bench of the National Company Law Tribunal (NCLT) approved the delisting plan of ICICI Securities, despite objections raised by two minority shareholders. The NCLT bench passed the order after reserving its decision on August 5.
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Opposition to ICICI Securities Delisting Plan:
Quantum Mutual Fund and minority shareholder Manu Rishi Gupta opposed the delisting of ICICI Securities in two separate pleas.
They argued that the share swap would negatively affect minority shareholders due to the low share price valuation at the time of the delisting announcement and alleged that ICICI Bank employees had unfairly influenced the voting process.
ICICI Securities countered by stating that the objectors had no standing in the matter, noting that objections to such schemes under Section 230 of the Act can only be made by those holding at least 10 percent of the equity or 5 percent of the total outstanding debt.
Quantum Mutual Fund held a 0.08 percent stake, while minority shareholder Manu Rishi Gupta held just 0.002 percent in ICICI Securities.
The NCLT Mumbai has dismissed the objections raised by Quantum Mutual Fund and Manu Rishi Gupta.
There were also concerns about the valuation of ICICI Securities’ shares, particularly since the stock price at the time of the announcement was slightly higher than its initial public offering (IPO) issue price of Rs. 520.
Shareholders questioned the fairness of the deal and the share-swap ratio, given the undervaluation of the stock relative to its potential.
ICICI Securities delisting plan:
Under the delisting plan, ICICI Securities will become a wholly-owned subsidiary of ICICI Bank. Shareholders of ICICI Securities will receive 67 ICICI Bank shares for every 100 ICICI Securities shares they own as of the record date.
Financials:
The company experienced significant growth in its revenue from operations, showing a year-on-year rise of nearly 75.7 percent from Rs. 934 crores in Q1 FY23-24 to Rs. 1,641 crores in Q1 FY24-25.
Similarly, its net profit increased during the same period from Rs. 271 crores to Rs. 527 crores, indicating a growth of 94.5 percent YoY.
Shareholding Pattern:
As per the June 2024 shareholding pattern, the Promoters hold a 74.65 percent stake in the company, Foreign Institutional Investors (FII) hold a 9.31 percent stake, while Retail Investors and Domestic Institutional Investors (DII) hold a 6.02 percent and 10.02 percent stake in ICICI Securities, respectively.
Stock performance:
The stock has delivered positive returns of nearly 27 percent in one year as well as around 11 percent returns year-to-date. However, in the last six months, the shares of ICICI Securities have given 3 percent of negative returns.
About the company:
Incorporated in 1995, ICICI Securities Limited engaged in the business of broking (institutional and retail) including allied services of extending margin trade finance and ESOP finance, distribution of financial products, merchant banking and advisory services.
Written by Shivani Singh.
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