• ISEC is a unique combination of multiple things - 1) Largest base of affluent Indians consisting of retail, affluent, HNIs and institutions; 2) combination of largest advisory team and the best digital platform; 3) Widest buffet of investment products available in India; 4) Safety & comfort of bank backed broker

• ISEC is responding to aggressive competition in plain vanilla broking by transforming itself from mere broking / distribution to "financial supermarket" for affluent & retail.

• Over the past 12 months, the management team led by Mr. Vijay Chandok has sharpened its focus on cross-sell by re-aligning employee incentives and entering into revenue sharing arrangement with ICICI Bank by aligning with their relationship managers.

• The company is seeing revenue & cost benefits and remain hopeful that they will cushion any volatility in broking income during the current transitory phase. This transformation could reduce the volatility of its revenue and earnings and at the same time provide long run way for growth. While H2FY20 will see some negative impact of transformation, we believe growth will re-start from FY21. Cash rich balance sheet, high dividend payout and strong parental support remain icing on the cake.

• Despite the onslaught of discount broking and the general decline in yields, bank backed brokers witnessed double digit growth in client base as well as revenue base on account of on-going consolidation in the broking industry. The largest discount broker seems to be shifting focus on products & wealth management; something which bank backed brokers already have a strong hold on. Another risk that needs monitoring is regulations around expense ratios of mutual funds

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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