Buy Angel One Ltd for the Target Rs.380 by Motilal Oswal Financial Services Ltd
Strong operational performance; operating margin at 45%+
* Angel One’s (ANGELONE) total income at INR10.9b (up 16% YoY/down 1% QoQ) was 5% above our estimates. For 1HFY27, total income grew 20% YoY. The beat was driven by distribution income, supported by strong credit distribution and robust IPO activity during the quarter.
* Total operating expenses declined 3% YoY/19% QoQ to INR6b (in line). Operating margin was 45.1% in 2QFY27, compared to 34.5% in 2QFY26, with standalone margin at 48.9%.
* The beat in other income and operational efficienciesresulted in a 17% PAT beat, with PAT at INR3.3b, growing 58% YoY/ 45% QoQ. For 1HFY27, PAT grew 74% YoY.
* October options ADTO rose 39% month-to-date, signaling a strong recovery in activity. The recent CAS circular is expected to further support derivative volumes post implementation. Management expects standalone margins of ~45% and consolidated margins of 42–45% in FY27.
* We raise our FY27/FY28 EPS estimates by 6%/4%, considering the strong performance in 2QFY27 as well as normalizing derivative activity following the implementation of CAS modifications. We reiterate our BUY rating on the stock with a revised TP of INR380 (premised on 22x FY28E EPS).
CAS impacts broking; MTF and distribution surge
* Gross broking revenue stood at ~INR7.8b in 2QFY27, growing 9% YoY/declining 9% QoQ (in line), leading to a decline in revenue contribution to 55% (60% in 2QFY26). The sequential decline in broking revenue was due to a CAS impact-led slowdown in the F&O segment (F&O brokerage down 14% QoQ; in line). Cash brokerage rose 29% YoY/declined 4% QoQ (in line). Commodity brokerage rose 41% YoY/18% QoQ (18% beat).
* ANGELONE’s order run rate was 5.6m per day in 2QFY27, declining from 6.8m in 1QFY27, driven by a 15% QoQ decline in F&O orders. Cash orders were largely stable sequentially. The commodity segment witnessed a 13% QoQ rise in orders, reaching an all-time high of 45m.
* Average client funding book grew 21% QoQ to INR74.5b. Net interest income grew 27% YoY/7% QoQ to INR3.6b. The exit MTF book for 2QFY27 stood at INR82.1b (INR71.5b in 1QFY27), with 437,000+ clients using the product as of 30 th Sep’26.
* During the quarter, 1.9m unique SIPs were registered, with AUM growing to INR219b (INR206b at the end of 1QFY27). 70% of users have more than 1 SIP.
* Credit disbursal increased 30% QoQ to INR6.9b, with the highest monthly distribution of INR2.8b witnessed in Sep’26. Only 179,000 users of ANGELONE’s 40m user base have availed credit through its platform, highlighting significant opportunity to scale this business.
* Wealth management AUM grew 19% QoQ to INR160b, with ARR contribution at 86%. Active assets stood at INR158.8b. UHNI AUM grew 17.5% QoQ to INR102.6b, while the total client base stood at 2,975+
* Distribution income grew 66% QoQ to INR713m, supported by a strong recovery in credit distribution as well as IPO activity during the quarter.
* Asset management AUM stood at INR5.7b as of Sep’26. The AUM is spread across 11 live schemes, with several folios growing to over 259,000.
* Employee expenses declined 7% YoY/5% QoQ to INR2.6b (in line), driven by attrition and ESOP reversal. Management expects employee expenses for FY27 to be ~INR11b, supported by a slower pace of backfilling. Admin expenses remained flat YoY at INR3.4b (in line).
Valuation and view
* A sequentially flattish performance in top-line in 2QFY27 was attributed to a drop in F&O activity, offset by strong distribution income, continuously expanding MTF book, and the highest-ever commodity activity. Other new businesses, such as the distribution of fixed deposits, wealth management, and AMC, are likely to gain traction over the medium term.
* On the cost front, lower employee expenses due to attrition and ESOP reversals resulted in robust operating profits, which were offset slightly by an increase in other expenses due to higher client acquisitions during the quarter. We expect consolidated operating margins to remain in the 42-45% range in FY27, supported by strong standalone operating margin (48.9% in 2QFY27).
* We raise our FY27/FY28 EPS estimates by 6%/4%, considering the strong performance in 2QFY27 as well as normalizing derivative activity following the implementation of CAS modifications. We reiterate our BUY rating on the stock with a revised TP of INR380 (premised on 22x FY28E EPS)
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