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Strong PAT beat driven by lower opex

* PAT came in at INR2.9b in 1QFY25 (up 33% YoY), registering a 21% beat, because of lower-than-expected operating costs and higher-thanexpected net interest income.

* Net brokerage income was up 72% YoY and flat QoQ at INR6.8b in 1QFY25. Net revenue from operations grew 76% YoY and 5% QoQ to INR9.2b.

* Total operating expenses grew 115% YoY and 18% QoQ (6% lower than expectations). On a sequential basis, the CI ratio rose to 62.3% in 1QFY25 (vs. our expectation of 67.9%). Excluding IPL sponsorship costs of INR1.14b, the CI ratio came in at 52.1% in 1QFY25.

* We have cut our FY25/FY26 earnings estimates by 1%/3% to factor in higher employee costs. We reiterate our BUY rating on the stock with a revised TP of INR3,300 (premised on 16x Mar’26E EPS).

Strong growth in F&O and Cash segments

* The 65% YoY growth in gross broking business (INR9.2b) was driven by F&O segment (+65% YoY) and cash segment (+81% YoY).

* Net interest income stood at INR2.4b, up 89% YoY and 24% QoQ (5% beat). MTF book stood at INR26.26b vs. INR11.17b in 1QFY24.

* Other income increased by 82% YoY to INR1.99b.

Ex-IPL sponsorship costs, CI ratio stands at 52.1%

* Total operating expenses jumped 115% YoY and 18% QoQ (6% lower than expectations). On a sequential basis, the CI ratio increased to 62.3% in 1QFY25 (vs. our expectation of 67.9%).

* Employee costs rose 63% YoY to INR2b (9% above est.), while admin & other expenses (incl. IPL cost) surged 147% YoY (12% lower than est).

Total orders grew 86% YoY

* ADTO stood at INR40.4t, up 93% YoY and flat QoQ. The total number of orders increased to 462m in 1QFY25 from 249m in 1QFY24.

* The number of F&O orders grew 75% YoY to 348m (199m in 1QFY24). Revenue per order was flat at INR22.1.

* Cash ADTO grew 16% QoQ to INR88b (+167% YoY). The number of orders rose 155% YoY to 97m. Sequentially, revenue per order rose to INR10.4.

* Commodity ADTO jumped 101% YoY and 35% QoQ. However, the total number of orders in commodities segment increased to 17m.

Highlights from the management commentary

* Regarding the 1) True to Label charges regulation: Angel One's FY24 revenue was INR3.5b. The business will eventually implement the same using its levers to offset it. 2) NSE stopping 1,000 stocks from being allowed to pledge: a minimal impact is expected, which can be offset via new pledges. 3) Despite the measures reported by media and SEBI's move to limit F&O volumes for the retail segment, the management is confident that it will be able to mitigate the volume impact through a number of levers, including pricing action.

* EBIDTA margins are likely to sustain at current levels (ex-IPL) in case of no action from the regulator. In case of an adverse impact of regulatory changes, the management believes it has levers to offset the impact, but margins can be hit for a short term. Excluding regulatory changes, the management is confident of reaching pre-QIP level RoE in the medium term.

Valuation and view: Maintain BUY

* ANGELONE is well positioned to grow business across key parameters such as client acquisition, number of orders and MTF book. Additionally, new segments, such as loan distribution and fixed income product distribution, should scale up in the near term. Over the longer term, AMC and Wealth Management will start contributing to revenues. We have cut our FY25/FY26 earnings estimates by 1%/3% to factor in the 1Q performance. We reiterate our BUY rating on the stock with a revised TP of INR3,300 (premised on 16x Mar’26E EPS).

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SEBI Registration number is INH000000412