Angel Broking IPO analysis!

Angel Broking IPO analysis!

Last updated: 22 Sep, 2020 | 11:25 am

Angel Broking IPO analysis!

Angel Broking's IPO to raise up to ₹600 crore is now open for subscription. Here are the details.

About Angel Broking

  • Angel Broking is one of the largest retail broking houses in India, in terms of active clients on NSE as of 30th June 2020. “Angel Broking’s client base has grown at a healthy 36.8% CAGR from ~10.6 lakh in FY18 to ~21.5 lakh as on 30 June 2020.” {{tweet1}}
  • The company’s broking and allied services are offered through (i) its online and digital platforms, and (ii) network of over 11,000 authorised persons as on 30th June 2020. The company managed ₹13,254 crore in client assets and over ~21.5 lakh operational broking accounts,  with an employee strength of 2500 employees. 
  • Angel Broking started shutting down its physical branches across the country gradually since 2016, and is totally on the digital platform now with its customers, barring a few branch offices for the B2B businesses. 


Angel Broking operates in a market with a large number of players and heavy competition. Angel Broking is the fourth largest broker in terms of active clients on NSE with a market share of 6.3% as of June 2020. Zerodha has the largest share of around 16% followed by ICICI Securities and RKSV Securities. The chart below shows market share on players on the basis of active clients on NSE as at the end of Q1FY21.

Angel Broking’s Financials

  • Angel Broking’s revenue (down 1.78% CAGR) and profits (down 8.8% CAGR) have declined over the last three fiscal years between FY18-FY20. “Angel Broking’s performance improved in Q1FY21, with revenues of ₹247 crore and profit of ₹48 crore, aided by robust client additions in the quarter”
  • As on Q1FY21, brokerage income accounted for ~74.7% of total revenue from operations. Top 20% of its active clients (~1.6 lakh clients) accounted for over 91.3% of company’s brokerage income.  
  • In Q1FY21, the company witnessed an average monthly client addition of ~1,15,565 clients, over a monthly average of 46,676 clients in FY20 representing a growth of 147.6%. 
  • The company has a strong dividend payout ratio of above 20% in the last three years. In FY20, dividend payout was about 28%. Company’s ROE has also been impacted, down from 23.2% in FY20 to to 14.7% in FY20.

Issue  details 

  • Issue open:  22 Sep - 24 Sep 2020
  • Face value: ₹10 per share
  • Price band ₹305-₹306
  • Fresh issue: ₹300 crore (98 lakh shares)
  • Offer For Sale: ₹300 crore (98 lakh shares) 
  • Reservation for QIB - 50% , Retail -35%, Non institutional Investors -15%
  • Bid lot: 49 shares

Key risks

  • Concentratration risk: Top 20% of its active clients (~1.6 lakh clients) accounted for over 91.3% of company’s brokerage income. Financial difficulties for these top clients would directly affect Angel’s business
  • Heavy reliance on brokerage: As on 30 June 2020, brokerage income represented ~72.2% of company’s total income. Angel Broking relies on its broking and related services business for a substantial share of revenue and profitability.
  • High competition: Angel Broking operates in a market with a large number of players and heavy competition.

INDmoney Recommendation: Subscribe

Angel Broking is the 4th largest player in an industry where growth prospects look attractive. According to CRISIL, the financial market in India is expected to continue to grow in line with its historical trajectory, due to strong demand and supply-side drivers, such as expected growth in the Indian economy, increasing urbanisation, increased consumerism due to higher per capita incomes.  Given its position, Angel Broking is well poised to take advantage of this potential growth, backed by digital and technology-led initiatives.

At the higher end of the price band, Angel Broking is available at a PE of about ~26.8 (based on FY20 earnings), which seems in line with listed peer ICICI Securities (PE of 28). Given factors such as robust growth potential, good return ratios, dividend payout history and reasonable valuations, we remain positive on this issue.