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In-line performance; broking recovers sequentially

* Gross broking revenue at ~INR7.2b declined 23% YoY but grew 4% QoQ (inline). The sequential growth in brokerage revenue was led by F&O activity (F&O brokerage rose 8% QoQ and was in line), while cash brokerage declined 21% YoY/16% QoQ. The commodity brokerage rose 28% YoY/5% QoQ; 8% miss.

* Net brokerage income at INR5.5b dipped 21% YoY/grew 5% QoQ (in line).

* Net interest income at INR2.9b was flat YoY but grew 5% QoQ (in-line).

* Other income at INR1.1b declined 52% YoY but grew 10% QoQ (7% beat on estimates). The sequential growth was largely driven by 40% QoQ growth in distribution income.

* Total income at INR9.4b (down 21% YoY but grew 6% QoQ) was in line with our estimates. For 1HFY26, total income declined 21% YoY to INR18.3b.

* Total operating expenses grew 3% YoY (in-line) to INR6.2b. The CI ratio increased to 65.5% vs 50.1% in 2QFY25, with employee expenses up 19% YoY while admin expenses declined 8% YoY. Operating profit for 2QFY26 came in at INR3.2b, reflecting a margin of 34.5% (49.9% in 2QFY25). For 1HFY26, the operating margin stood at 28% (44% in 1HFY25).

* PAT for the quarter came in at INR2.1b (in-line), down 50% YoY but up 85% QoQ. For 1HFY26, PAT declined 54% YoY to INR3.3b.

Continued momentum in F&O and commodity; cash declines

* ANGELONE’s 2QFY26 witnessed a continued rise in F&O activity after the resetting of base post F&O regulations in 4QFY25, with Angel reporting a 7% sequential increase in F&O orders (8% F&O revenue growth QoQ). A volatile market environment resulted in a 3% sequential decline in cash orders (16% cash revenue decline QoQ). A surge in commodity activity resulted in a 7% sequential growth in commodity orders (5% sequential growth in commodity revenue).

* Average client funding book witnessed a substantial growth of 26% QoQ to INR53.1b (INR42.1b in 1QFY26). Net interest income grew 5% QoQ to INR2.9b.

* Maintained SIP momentum and ~100% sequential growth in credit disbursals to INR4.6b during the quarter (INR13.9b – cumulative as of Sep’25), resulting in a 40% sequential growth in distribution income.

Expenses broadly in line; operating margin at 34.5%

* Total operating expenses grew 3% YoY to INR6.2b with 19% YoY growth in employee expenses, offset by an 8% YoY decline in admin expenses.

* The CI ratio increased to 65.5% in 2QFY26 from 50.1% in 2QFY25.

* Employee costs included ESOP costs of INR470m and employee benefit expenses of INR2,275m.

* Admin and other expenses declined 8% YoY to INR3.4b, owing to a decline in customer additions to 1.7m during the quarter (3m in 2QFY25).

Valuation and view

Sequential growth momentum was maintained in 2QFY26, with the industry seeing recovery in F&O activity and a strong surge in commodity activity, offset by a volatile market impacting the retail cash activity. Costs were controlled with flattish employee expenses and a decline in customer acquisition costs. The new business of loan distribution witnessed strong growth during the quarter. Other new businesses, such as the distribution of fixed deposits, wealth management, and AMC, are likely to gain traction over the medium term. We may review our estimates after the earnings call on 16th Oct’25.

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