As business traction remains strong and valuations look attractive, brokerage firm maintained a buy rating on the broking firm Angle One with a target price of Rs 1,980, implying an upside of 20% from the current market price of Rs 1,648.70.
“Angel One has reported consistent client additions, growth in a number of orders and cost discipline, which is reflected in PAT increasing from Rs134 crore in Q2FY22 to Rs 214 crore in Q2FY23,” ICICI Securities said.
“While the number of orders and MTF book will likely have bearings from market movement, the high number of gross clients (12 lakh in Q2FY23), gradual increase in systemic steady investors and attractive valuations (17.7x times FY23E PAT) make us positive on the stock,” it added.
The broking firm Angel One has reported a 31% year-on-year increase in revenues at 750 crore for the quarter that ended September, while its profit jumped 59% to 213.56 crore during the period. The company saw a 77.4% YoY increase in its client base to 11.6 million at the end of September.
In Q2FY23 gross client addition of Angel One declined 7% QoQ to 12 lakh in Q2FY23 from 13 lakh in Q1FY23 and less than 2-year-old clients contributed 69% of brokerage revenue in Q2FY23 as against 72% in Q1FY23. The number of orders of the company also grew by 11% QoQ.
Q2FY23 ARPU of the company stood at Rs 430, down 5% QoQ. The overall revenue (net) grew 8% QoQ driven by 11% QoQ growth in net brokerage revenue and 25% growth in other operating revenue. The total operating cost of the company remained flat QoQ driven by a 3% QoQ dip in other expenses and an increase of 8% QoQ in employee costs. EBITDA margin also improved 400bps QoQ to 52.4% in Q2FY23,
“We expect orders per day to remain resilient in the medium term due to client additions although it may dip in the near term, in line with market sentiment. We expect FY23 orders at 91.8 crore (43.7 crore in H1FY23) and a 10% growth in FY24 over FY23. We expect MTF book to dip in line with corrections seen in cash ADTO,” ICICI Securities said.
“Employee cost and other expenses are expected to remain elevated on account of new hirings and investments towards marketing cost in order to expand the market share. Accordingly, we expect FY23E/24E EBITDA margin at 49%/50.7% resulting in PAT of Rs 750/850 crore, respectively,” it added.
(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Economic Times)
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