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In-line revenue; profits higher than expectations

ANGELONE reported a PAT of INR3b, a 7% beat on our estimates and saw a growth of 42% YoY. Net Revenue grew 48% YoY and 30% QoQ at INR6.7b (in line with our estimate). 

CI ratio increased significantly to 48.7% (vs. estimate of 52.6%), declining 270bp sequentially. Expenses were 4.5% lower than our estimates, primarily due to a reduction in administrative and other expenses, which came in 7% lower than expected. 

The Board has declared 2nd Interim Dividend of INR12.7 per share for FY24. 

In 1HFY24, the company reported revenue/PAT growth of 36%/33%.

We have raised our FY24/FY25 earnings estimates by 8.9%/7.9% to factor in higher net interest income on account of growth in MTF book, relatively lower admin expenses, and better-than-forecasted growth in F&O orders. We reiterate our BUY rating on the stock with a revised TP of INR 2,550 (premised on 16x Mar’25E EPS). We reiterate our BUY rating on the stock with a revised TP of INR 2,550 (premised on 16x Mar’25E EPS).

Revenues in line; F&O and Cash share improves

Gross broking business grew 40% YoY, driven by the F&O segment (up 45% YoY and up 32% QoQ) at INR 6.2b and the cash broking segment (+19% YoY, +43% QoQ and 27% above our estimates) at INR 0.8b. 

Gross client acquisition run rate stood at 2.1m, up 60% QoQ. The number of orders stood at 338m in 2QFY24, up 36% QoQ. This was broadly in line with estimates.

40% YoY growth in the gross broking business was driven by the F&O segment (up 45% YoY and up 32% QoQ) at INR 6.2b and the cash broking segment (up 19% YoY, up 43% QoQ and 27% above our estimates) at INR 0.8b.

Interest income came at INR 1.8b, 7% better than estimates, up 46% YoY and 32% QoQ. MTF book stood at INR19.5b vs. INR11.4b in 1QFY24. 

Lower opex led to moderation in C/I ratio

Total opex increased 49% YoY to INR3.9b (5% lower than our estimates). This is because admin & other expenses came in 7% lower than expectations, which led to a moderation in CIR to 48.7%, primarily driven by scale benefits. 

Employee costs increased 21% YoY to INR1.3b (in line with our estimate)

Highlights from the management commentary

Angel One is now integrating its Super App Platform with its lending partners. It will start offering consumer credit products by offering unsecured consumer loans. It has set high aspirational targets for growing its retail credit business. Angel One has incorporated Angel One Wealth Management as a WOS, where it will be targeting wealth management customers with a ticket size of INR5m-INR 10m.

Market share improved across segments 

 ADTO stood at INR29.6t, up 30% QoQ and 143% YoY. The total number of orders increased to 338m in 2QFY24 from 249m in 1QFY24. 

Its F&O market share improved to 26.2% from 24.5% in 1QFY24. F&O ADTO grew 31% QoQ and 146% YoY to INR291.8t. The number of orders increased to 264m from 199m in 1QFY24. Revenue per order is stable at INR23.4. 

Cash ADTO market share improved to 14% from 13.4% in 1QFY24. Cash ADTO jumped 42% on a QoQ basis to INR47b (up 21% YoY). The number of orders increased 63% QoQ (up 29% YoY) to 62m. However, revenue per order declined 8% YoY to INR12.9.

Market share for ANGELONE in the Commodity segment moderated to 56.6% in 2QFY24 from 56.9% in 1QFY24. 

Revised estimates to factor in beat in 2QFY24; reiterate BUY 

ANGELONE is a perfect play on: 1) the financialization of savings and 2) digitization. It demonstrated a strong operating performance in 2QFY24 with markets hitting alltime high. The management continues to invest in technology to strengthen its position. We have raised our FY24/FY25 earnings estimates by 8.9%/7.9% to factor in higher net interest income on account of growth in MTF book, lower-thanestimated opex and better-than-expected F&O orders. We reiterate our BUY rating on the stock with a revised TP of INR 2,550 (premised on 16x Mar’25E EPS). We reiterate our BUY rating on the stock with a revised TP of INR 2,550 (premised on 16x Mar’25E EPS).