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Our view – Management revises revenue impact but calls it transient

Regulatory aspects – Management revises negative impact from regulatory changes from 13-14% of revenue to 18-20%: The impact of the True to Label Circular, net of product repricing, would be limited to 1-2% of revenue. Earlier, an impact of 13-14% of revenue was expected due to the introduction of new regulations pertaining to Equity Index Derivatives. However, due to the bunching up of monthly expiry, an additional impact of 3-4% of revenue is expected. Management regards the total revenue impact of 18% as a one-time impact and, as of now, they do not estimate any impact on the lifetime value of the customer. While they did not provide guidance per se, they stated that revenue can normalize in 2-3 quarters

Traditional businesses – Some degree of underlying business traction has continued for Angel One:

Total gross revenue was at Rs 12.64bn, up 19% YoY. Gross broking revenue at Rs 8.18bn was 65% of total revenue and was up 15.5% YoY. 2.1mn clients were acquired during the quarter, taking the client base to 29.5mn. The number of orders executed amounted to 422mn during the quarter, up 20.5% YoY but down - 13.8% QoQ, the number of trading days being lower 4.7% QoQ. Average client funding book was Rs 40.53bn, up 4.2% QoQ and 118% YoY. Other operating expenses were down -9.9% QoQ to Rs 3.34bn due to lower client acquisition. Employee expense including ESOPs was at Rs 2.37bn, up by 3.1% QoQ and 68% YoY.

We maintain ‘BUY’ rating on Angel One with a revised price target of Rs 3000:

We value the broker at 21x FY26 P/E for an FY24-27E EPS CAGR of 8.2%.

Other Highlights (See “Our View” above for elaboration and insight)

* Revenue: Net Revenue at Rs. 9,841mn was down/up -17.8%/19.2% QoQ/YoY, where the net fees and commission income has de-grown/grown -21.7%/9.8% QoQ/YoY

* Client Base: The total client base stood at 29.5mn up by 7.3%/51.4% QoQ/YoY and the NSE active client base was at 7.8mn up by 5.5%/46.3% QoQ/YoY

* Volume: The total order volume was 421.7mn, down/up by -13.8%/20.5% QoQ/YoY where the F&O volume was at 309mn, down/up by -11.5%/17.9% QoQ/YoY

* Client Funding Book: The average client funding book stood at Rs. 40,530mn, and have grown by 4.2% QoQ and 118% YoY

* Operating profit margin: Operating profit margin for the quarter, at 41.9%, was down -792 bps QoQ and -197 bps YoY

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