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Regulations take centerstage but Angel One will manage and mitigate

Our view – Angel One possesses pricing and other levers

Regulatory aspects - Angel One is currently grappling with multiple regulatory headwinds but seems to be in a position to manage or possesses mitigating levers: Regarding the “True to Label” regulations, the company has enough levers to offset its impact and is not ruling out changes in pricing. Secondly, if the expiry period were to be expanded for certain indices, these would still be available to trade across the month and the impact would not be much. Thirdly, regarding lot size change, the company believes that traders have a certain risk appetite and will choose the lot size accordingly and hence, there will not be much impact on volume.

Wealth management – Angel One now seems to be suggesting that it does not intend to leave any money on the table in terms of target customers: Management has stated that the intention is to service all individual needs when it comes to capital markets. The intention is to target all categories of HNI customers including emerging HNI, HNI as well as Ultra-HNI customers with ticket size in excess of Rs 250mn.

Client funding – Interest income from client funding book seems to have a healthy outlook: There is good traction from both the direct and assisted business and the company expects this book to grow at a decent pace. The capital raise has allowed the company to expand the user base, including larger customers. The MTF book could rise 50% in 6-12 months’ time.

We maintain ‘BUY’ rating on Angel One with a revised price target of Rs 3000: We value the broker at 20x FY26 P/E for an FY24-26E EPS CAGR of 7%.

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

* Revenue: Net Revenue at Rs. 11,088mn was up 4.6%/77.4% QoQ/YoY, where the net fees and commission income is flat QoQ but has grown by 75% YoY

* Client Base: The total client base stood at 24.7mn up by 11.3%/63.6% QoQ/YoY and the NSE active client base was at 6.7mn up by 9.8%/52.3% QoQ/YoY

* Volume: The total order volume was 462mn, down/up by -1.9%/85.5% QoQ/YoY where the F&O volume was at 348mn, down/up by -2%/74.9% QoQ/YoY

* Client Funding Book: The average client funding book stood at Rs. 26,247mn, and have grown by 29.4% QoQ and 140.6% YoY

* Operating profit margin: Operating profit margin for the quarter, at 37.4%, was down -733 bps QoQ and -1091 bps YoY

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