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Strong show led by surge in orders

* Net brokerage income grew 65% YoY to INR6.8b in 4QFY24 and total income from operations rose 65% YoY to INR10.6b.

* Total operating expenses surged 114% YoY and 26% QoQ. On a sequential basis, the CI ratio declined marginally by ~80bp to 55.2% in 4QFY24.

* PAT stood at INR3.4b, up 27% YoY and 31% QoQ. ? For FY24, net revenue/PAT grew 45%/26% YoY to INR33.3b/INR11.3b.

* The company raised INR15b via QIP and the shares were allotted on 2nd Apr’24 at INR2,555.01 per share

* We have raised our FY25/FY26 EPS estimates by 6%/8% to factor in the scale-up in business after the fund raise. On the other hand, IPL-related expenses have led to a cut in our EBIDTA margin estimates. We reiterate our BUY rating on the stock with a revised TP of INR4,200 (premised on 20x Mar’26E EPS).

Robust growth in broking business

* Gross client acquisition run rate stood at 2.9m, up 18% QoQ.

* Growth in gross broking business (+59% YoY to INR9.2b) was driven by F&O segment (+55% YoY/+32% QoQ) and cash segment (+119% YoY/+30% QoQ).

* Net interest income came in at INR1.9b, up 64% YoY and 9% QoQ. Avg. client funding book stood at INR20.29b vs. INR13.14b in 4QFY23.

* Other income (depository income, distribution income) increased by 66% YoY to INR 1.87b.

CI ratio stands at 55.2%

* Total operating expenses jumped 114% YoY and 26% QoQ. On a sequential basis, the CI ratio declined marginally by ~80bp to 55.2% in 4QFY24.

* Employee costs increased 12% QoQ to INR1.58b, whereas admin & other expenses rose 33% QoQ. This was led by hiring in the new business of wealth and AMC, along with ESOP costs for existing employees.

* The surge in operating expenses was owing to an increase in gross client additions, tech investments in new tools on the Super App and IPL-related expenses of INR227m.

Highlights from the management commentary

* Superior engagement journeys drive consistent total net revenue from every cohort. As cohorts mature, their activity on the platform improves over time. ~54% of the FY21 acquired base transacted over four years.

* The IPL sponsorship for five years (INR825m annually) will help ANGELONE penetrate deeper in tier III and tier IV cities. There would be an elevated cost of INR1.2b in 1QFY25 for IPL-related media and advertising.

* Accounting for client acquisition and advertisement costs, the operating margin would be in the range of ~43-45% for FY25 (including ~1.5% higher cost impact from new businesses).

Total orders jump 79% YoY

* ADTO stood at INR44t, up 22% QoQ and 138% YoY. The total number of orders increased to 471m in 4QFY24 from 263m in 4QFY23.

* F&O ADTO grew 23.5% QoQ and 141% YoY to INR43.85t. The number of orders grew 44% YoY to 355m (215m in 4QFY23). Revenue per order declined to INR22.1.

* Cash ADTO grew 38% QoQ to INR76b (+181% YoY). The number of orders rose 38% QoQ (+176% YoY) to 102m. However, revenue per order declined by 20% YoY to INR10.

* Commodity ADTO increased 93% YoY and 8% QoQ. However, the total number of orders in commodities segment remained flat at 14m.

Valuation and view: Raise estimates to factor in fund raise; reiterate BUY

ANGELONE, with the INR15b fund raise in place, is well positioned to grow business across key parameters such as client acquisition, 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 long term, AMC and Wealth Management will start contributing to revenues. We have raised our FY25/FY26 EPS estimates by 6%/8% to factor in the scale-up in business after the fund raise. On the other hand, IPL-related expenses have led to a cut in our EBIDTA margin estimates. We reiterate our BUY rating on the stock with a revised TP of INR 4,200 (premised on 20x Mar’26E EPS).

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