Up 430% from 52-week low, where is Angel One headed after Q4 results?

NEW DELHI: Shares of Angel One climbed 10 per cent in Thursday's trade to hit a record high after stellar Q4 numbers. The intraday rise also took gains on the counter to 430 per cent from a 52-week low level. Analysts said the Q4 results that the broking firm announced on Wednesday were ahead of their estimates, as they maintained a 'buy' rating on the stock.

Angel One said its profit for the quarter rose 101 per cent YoY to Rs 204.80 crore on a 64 per cent jump in gross revenues at Rs 685.30 crore. The broking firm added 15 lakh gross clients for the quarter, up 54 per cent YoY, taking the total gross addition to 53 lakh in FY22. Less than 2-year-old clients contributed 76 per cent of brokerage revenue in the March quarter. The active client ratio improved to 40.2 per cent from 39.7 per cent in the December quarter.

ICICI Securities said increased retail footprint in capital markets provides enough levers for countering apparent cyclicality in retail volumes. This can make the earnings trajectory of capital market plays less sensitive to market volatility and potentially lead to increase in valuation multiples, it said.

As far as Angel numbers go, "We find comfort in strong traction in brokerage revenue as seen from monthly trends, strong client acquisition momentum (gross clients added in Q4FY22 were 1.5mn vs 1.3mn in Q3FY22; significantly higher valuation multiples for capital market players like CAMS, CDSL, AMCs and available optionalities in terms of distribution/AMC business under the umbrella brand Ängel One. We factor in FY23 earnings growth of 15 per cent to Rs 720 crore and a similar growth for FY24 to Rs 830 crore," ICICI Securities said.

It has upped its target on the stock to Rs 2,230 from Rs 1,900.

Angel One’s results are slightly better than our expectations, said Abhay Agarwal, Founder, and Fund Manager, Piper Serica.

"The net profit for the quarter was more than Rs 200 crore, which puts the company at an annual net profit of Rs 1000 crore. This strong performance of the company is a result of very solid execution in an extremely favorable demand environment.

“Angel One's new client acquisition was completely through digital means resulting in a 9.8 per cent client growth. The active clients grew even faster at 19.5 per cent. Focus on tech has enabled Angel One to scale and grow its user base rapidly," Agarwal said.

Agarwal said the company has also rewarded the shareholders handsomely by maintaining a dividend payout ratio of more than 35 per cent throughout the year.

Motilal Oswal said Angel Broking is a perfect play on the financialisation of savings and digitisation, as it demonstrated a strong performance across key operating parameters in the March quarter

"As guided by the management, it continues to invest in technology and strengthen its position. The client addition trajectory for Angel Broking will continue, led by stark under penetration. The cyclicality in revenue is much lower for discount brokers vs their traditional counterparts due to the shift towards a flat fee revenue model. We look to review our estimates and target prices post the concall on Thursday," the brokerage said while maintaining a buy rating on the stock.

Motilal Oswal said less than 5 per cent of Indian household savings go towards equity investing but this ratio is increasing as young earners have started to invest their savings in equity.