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Decline in daily orders | Uptick in the customer acquisition run-rate

ANGELONE released its monthly update highlighting its key business numbers for May’22. The key takeaways are as follows:

* ANGELONE’s gross client acquisition run-rate saw an uptick to 0.47m in May’22 v/s 0.44m in Apr’22. The addition run-rate continues to remain better than our monthly estimate of 0.4m in FY23.

* Total client base for ANGELONE stood at 10.1m as of May’22 (up 5% MoM and 109% YoY).

* Average funding book saw a strong MoM growth (+10%) of ~INR18.8b.

* The number of orders stood at 70.6m in May’22, up 7% MoM, whereas the number of orders per day saw a 4% monthly decline to 3.4m.

* Overall ADTO fell 6% MoM, with a 5.5%/27.5% decline in F&O/Cash ADTO.

* On a MoM basis, ANGELONE lost 150bp market share in the F&O segment, but gained 190bp in the Commodities segment.

Valuation and view:

ANGELONE is a perfect play on: 1) financialization of savings and 2) digitization. We expect the company to record 23% revenue CAGR over FY22-23. The EBITDA margin is expected to remain steady ~50% as ANGELONE has guided at sustained investments in technology and marketing, with a focus on acquiring more customers and improving its activation rates. We expect 23% PAT CAGR over FY22-24 and a RoE of 39.5% in FY24. The stock trades at 13x FY24E P/E, which is attractive considering ANGELONE’s strong earnings growth profile. We maintain our Buy rating on the stock with a one-year TP of INR2,300 (premised on 20x FY24E EPS).

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