Analysis of Angel One Limited
What is the stock and what does the company do? (About Angel One)
Angel One Ltd is a diversified financial services company and is primarily engaged in the business of stock, commodity and currency broking, institutional broking, providing margin trading facility, depository services and distribution of mutual funds, lending as a NBFC and corporate agents of insurance companies.
Key Performance Indicators Q4FY24 :
Total Client Base - 22.2 Mn
Gross Client Acquisition - 2.9 Mn
NSE Active Client Base - 6.1 Mn
Number of Orders - 471 Mn
Average Daily Turnover - Rs. 44.4 Trn
Client base <25 yrs age - 48%
Client base >25 yrs age - 52%\
Market Share Q4:
Share in India’s Demat Accounts - ~15%
Share in NSE Active Client Base - ~15%
The company has partnership with various 3rd party such as vested, smallcase, Sensibull, Streak, Quicko & Marketsmojo.
How has the Angel One performed recently?
Angel one returns :
1 - week: (0.19%)
1 - month : (0.55%)
3- months : (9.01%)
YTD - (26.09%)
1 Year - 96.33%
3 years - 224%
Nifty 50 returns
1 - week: (0.19%)
1 - month : (0.52%)
3- months : (2.29%)
YTD - (3.44%)
1 Year - 19.42%
3 years - 47.86%\
The Angel one has performed better than Nifty 50 benchmark.
What are the key financial metrics & growth drivers?
Consolidated financial performance on a YoY basis the revenue of the company surged by 63.5% and stood at ₹1,358.5 crore as compared to ₹831.1 crore in Q4FY23, while the operating profit of the company grew by 28.3% and stood at ₹475.5 crore as against to ₹370.5 crore in Q4FY23. Similarly, the net profit of the company also jumped by 27.3% to ₹340 crore as compared to ₹267 crore in Q4FY23.
Revenue Breakup Q4FY24 :
Gross Broking - 68%
Interest on Deposits - 18%
Ancillary Transaction - 8%
Depository - 4%
Distribution - 1%
Others - 1%
Gross Broking Revenue Split Q4FY24 :
F&O - 85%
Cash - 11%
How does the stock’s valuation compare to its peers?
Market Capitalization: Angel One has a market cap of around ₹24,174 crore, making it one of the larger players in the industry. It ranks behind Motilal Oswal Financial Services (₹33,315 crore) and ICICI Securities (₹22,978 crore) in terms of market cap.
Valuation: Angel One has a P/E ratio of 21.33, which is higher than ICICI Securities (16.17) but lower than Motilal Oswal (31.33) and Nuvama Wealth Management (219.74). This suggests Angel One is valued at a premium to ICICI Securities but a discount to Motilal Oswal and Nuvama.
Financial Performance: In the latest quarter, Angel One reported revenue of ₹1,347 crore and net profit of ₹346 crore. This puts it behind ICICI Securities in revenue (₹1,543 crore) but ahead in net profit (₹535 crore). Angel One’s net profit margin of 25.7% is higher than ICICI Securities’ 34.7%.
What is the company’s competitive advantage?
Promoter & Management : Mr. Dinesh Thakkar, MD and Chairman of Angel One Limited, has more than 3 decades of experience. Promoters have not pledged the shares for raising money from FIs.
Strong market position with 100% retail franchise The entire client base of the company is retail in nature and has no exposure to institutional clientele. The company’s market position on NSE in terms of active client base is 3rd as on December 31, 2023. On the basis of Average Daily Turnover (ADTO), it has an overall market share of 26.8% as on December 31, 2023Digital first approachAngel One’s multi-asset trading, mobile-first approach, advanced web platform, algorithmic tools, flat brokerage and educational resources make it a unique and compelling choice for both new and experienced investors in India.
What are the potential risks and challenges?*
Cash flow Statement : Angel one’s cash flow from operations has been negative for the FY2024 to Rs. (330 Cr), even though the company has shown strong results.
Competitive market : Angel one competes with the new edge startups such as Zerodha, Upstox, Groww and traditional players such as ICICI securities, Kotak Securities.
Broking revenue dominating the income profile :
Brokerage forms 68% of the total income followed by interest income which constitutes 18% of the total income. Of the total brokerage income, F&O accounts for 84% of the share followed by cash with 11% share during 9MFY24 which further concentrates the broking income in one segment.
Susceptibility towards regulatory changes SEBI has been actively changing the regulations for retail investors.
What are the brokerage & analysts saying?
Based on Q4FY2024 results, the following brokerages have given buy rating,
ICICI Securities : The brokerage house upgraded the rating from “Hold” to “Buy” on 17th April 2024.
Target price - 3,469
Motilal Oswal Financial services : The brokerage house kept the “Buy” rating on 18th April 2024.
Target price - 4,200
Analysts 12 month target shows 40%+ upside from current market price of 2470 on 4th April 2024.
What are the key technical indicators are showing?
The Relative Strength Index (RSI) of Angel one is 57, which indicates neutral. RSI of the stock should be in between 30 to 70.
It’s 50 day and 200 day moving averages are 1614 and 802 respectively, which shows a bullish signal.
According to investing.com, out of 12 technical indicators, 6 are showing “Buy”, 4 are showing “Neutral”.
What is the overall view on Angelone?
Promoters - Promoters have a track record of three decades with no shares pledged to FIs.
Fundamentals - CAGR of Sales and Profit for the last 5 years is 49% and 70% respectively. ROE for the last five years is 42%.
Angel one has tripled their Dmat accounts for the last three years.
Technical - Technical indicators and moving averages are showing “Buy” signal.
Risks - Concentration of revenue and cash flow from operating activities are two key aspects to be watched out internally and SEBI regulations externally.
Brokerage - Based on the brokerage reports, there is 40% up side.
Disclaimer - the analysis is based on various sources and search results.
