ICICI Securities hits 52-week high as shareholder discontent grows against delisting proposal

On June 29, ICICI Securities announced that it will delist and become a wholly-owned subsidiary of its parent company ICICI Bank.

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Shares of ICICI Securities surged to their 52-week high of Rs 651.80 in afternoon trade on September 7 after Moneycontrol reported that Norway’s government pension fund manager and an Indian PMS are likely to vote against the proposal to delist ICICI Securities, as clamour over low valuation grows among investors.

At 2.25 pm, shares of ICICI Securities were trading 3.28 percent up at Rs 641.

Norway’s Norges Bank Investment Management’s Government Pension Fund Global holds 3.13 percent stake in ICICI Securities.

A south India-based portfolio management service, which also holds ~3 percent of the company, is also against the delisting, said sources aware of the matter.

Read Full Story: Norges Bank may vote against ICICI Securities delisting proposal as shareholders seek higher valuation

While PMS directly credit the shares to their clients’ accounts, they still hold the power of attorney to operate those and vote.

On June 29, ICICI Securities announced that it will delist and become a wholly-owned subsidiary of its parent company ICICI Bank. Public shareholders of the broking firm would be allotted 67 equity shares of ICICI Bank for every 100 equity shares of the company.

As of September 6 closing price of Rs 620.65, ICICI Securities shareholders would get only a 3.2-percent premium. ICICI Bank holds 74.83 percent in ICICI Securities and public shareholders the remaining 25.17 percent.

Opposition

Furthermore, a minority shareholder and SEBI registered PMS provider named Manu Rishi Guptha has sent out emails to all his fellow shareholders to ‘fiercely oppose and vote against the delisting resolution’. Over 500 shareholders have joined Guptha’s Telegram channel to decide on the next course of action.

“During the ICICI Securities IPO in 2018, the shares were offered at a valuation of 30x trailing earnings. At the time of delisting today, ICICI Bank is offering just 18x of FY23 earnings,” he said.

“At 30x earnings, which we believe is a fair valuation, the stock should be valued at Rs 1,030 per share or at least the fair offer should be ICICI Bank share price on the delisting date i.e., a 1:1 ratio,” he added.

Shares of ICICI Securities are up 30 percent this year till date, while parent ICICI Bank has gained around 7 percent during the period.

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