ICICI Securities stock zooms 11%, hits 52-week high on delisting proposal

Banking major ICICI Bank today announced that it will consider a proposal of delisting equity shares of its subsidiary ICICI Securities Ltd.

"We wish to inform you that a meeting of the Board of Directors of ICICI Bank Limited (‘the Bank’) is scheduled to be held on Thursday, June 29, 2023 to, inter alia, consider a proposal for delisting of equity shares of ICICI Securities Limited (“ICICI Securities”), a listed subsidiary company of the Bank, pursuant to a scheme of arrangement with the Bank under Chapter VI, Part C, Regulation 37 of the SEBI (Delisting of Equity Shares) Regulations, 2021," the brokerage firm said in a stock exchange filing.

ICICI Securities, in a separate intimation, also said that a meeting of the Board of Directors of ICICI Securities is also scheduled to be held on Thursday, June 29, 2023, to consider the scheme.

Reacting to the development, ICICI Securities stock zoomed over 11% on the Bombay Stock Exchange (BSE). The stock opened a gap-up at ₹650, thereby hitting a 52-week high, against the previous session close of ₹563.8. At the current share price, ICICI Securities' market cap has surged to ₹20,441.75 crore.

The stock has seen a significant jump of 21.39% in the past week, while a 26.38% rise in the past month. In the year-to-date time, the share has given a 28.15% return.

The company had reported ₹263 crore profit for January to March 2023 quarter, down 23% against ₹340 crore in the year-ago period. Its total income was ₹886 crore, down from ₹891 crore in the year-ago period.

The promoters hold a 74.85% stake in ICICI Securities, while the 25.15% stake is held by the public.

The ICICI Bank board had also approved raising its shareholding in its general insurance arm ICICI Lombard General Insurance by 4% last month. ICICI Bank, which currently holds a 48.02% stake in ICICI Lombard General Insurance, plans to acquire at least 2.5% of the 4% shares by September 9, 2024, as per the exchange filing.

The current Reserve Bank of India (RBI) rule permits banks to hold not more than 30% of the paid-up share capital of a company unless the company is a subsidiary of the bank. In the case of a subsidiary, the bank can hold more than 50% shares in a company. As of March 31, 2020, ICICI Bank held a 55.86% stake in the general insurance company. However, it offloaded its stake in tranches over the next three years to 48.02%. In a bid to limit its exposure in the company to 30%, under Section 19(2) of the Banking Regulation Act, the bank needs to acquire a minimum of 2.5% stake before 9 September 2024.

Shares of India’s second-largest private lender ICICI Bank rose 0.36% today after opening the gap-up at ₹926.20 and surged to an intra-day high of ₹931.75. The bank's net profit grew to ₹9,122 crore for the quarter ended March 31, 2023, while its NII surged 40.2% year-on-year to ₹17,667 crore against ₹12,605 crore in the corresponding period a year ago.

ICICI Bank’s provisions surged by 51.5% year-on-year to ₹1,619 crore including a contingency provision of ₹ 1,600 crore.