Published on 21/09/2020 11:27:00 AM | Source: ICICI Direct

IPO Note - Angel Broking Ltd By ICICI Direct

Posted in IPO Reports| #IPO #ICICI Direct #Angel Broking Ltd

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Incorporated on August 8, 1996, Angel Broking is now a technology-led financial services company providing broking and advisory services, margin funding, loans against shares (through one of its Subsidiaries, AFPL) and distribution of financial products to its clients. It is one of the largest retail broking houses in India in terms of active clients on NSE as of 30 June 2020.

Angel provides broking services through various web, digital and .exe platforms, which are integrated with each other enabling its clients to have a seamless trading and investment experience, increased emphasis on digitisation, and growth in returns from such financial investments.

As of June 30, 2020, Angel ranks as No. 1 stock broking house in terms of authorised persons registered with NSE. The company managed | 13254 crore in client assets and ~21.5 lakh operational broking accounts with a workforce strength of 2500 employees. As of March 2020, Angel Broking’s revenue from operations came in at | 711 crore in FY20. Healthy ADTO growth (led by flat brokerage) and well controlled opex resulted in EBITDA of | 154 crore with OPM at 22%. PAT was | 87 crore, entailing into a 32% CAGR in FY17-20.


One of largest retail broking houses with strong brand equity

As per Crisil Research, Angel Broking is one of the largest retail broking houses in India, in terms of active clients on NSE as of 30th June 2020. The company has enhanced its client base by 36.8% CAGR from ~10.6 lakh in FY18 to ~21.5 lakh as on 30 June 2020. In Q1FY21, the company witnessed an average monthly client addition of ~115565 clients, over monthly average of 46,676 clients in FY20, representing a growth of 147.6%. Angel Broking witnessed an 151.91% CAGR in average monthly net client addition run rate from FY18 to June 2020, against industry growth rate of 43.63% CAGR.

This led to a significant improvement in Angel’s market share in incremental demat accounts from 4.16% in FY18 to 14.72% in June 2020. Furthermore, augmentation of its digital processes, and an all-inclusive flat pricing model has enabled Angel Broking to substantially grow ADTO from | 25,317.6 crore in Q1FY20 to | 61,894.5 crore in Q1FY21 (up 144.5% YoY)


Key risk and concerns

* General economic conditions could impact profitability

* Statutory & regulatory requirements could impact business

* Relying extensively on brokerage business

* Concentration risks to persist


Priced at P/E of 29x FY20 on upper band

At the higher end of the price band of | 306, the stock is available at P/E of ~29x FY20 EPS (post issue), while the stock is available at ~16x P/E at Q1FY21 (annualised basis) EPS.


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