Rationale

 The ratings factor in ICICI Securities Limited's (ISec) strong parentage, as it is a subsidiary of ICICI Bank Limited (rated [ICRA]AAA (Stable)/[ICRA]A1+; 75% stake in the company), with significant operational linkages with the parent and a shared brand name. ISec's strategic importance to the parent is evident from the managerial and operational support received by it, including senior management transfers (from ICICI Bank), customer-sourcing and cross-selling support, and access to the bank's retail clientele, branch network and infrastructure. The ratings also take into account the company's leading position in securities broking, its strong retail franchise supported by its position as a bank brokerage house, its track record in the investment banking business, and its healthy financial profile with steady profitability and comfortable capitalisation. The ratings also factor in the inherent volatility in ISec's primary business of equity broking, the risks associated with capital markets related businesses and the competition in this space. While assigning/reaffirming the rating, ICRA has taken note of the increasing prominence of the company's secured margin trade funding (MTF) business. ISec's ability to scale up the MTF book while maintaining adequate capitalisation as well as asset quality (in the MTF book) will remain a key monitorable. The Stable outlook indicates ICRA's expectation that the company would continue to have a strong retail franchise and market position, supported by its position as a bank brokerage house, and steady profitability levels.