The Rs 600-crore initial public offering of Angel Broking, so far, is subscribed 1.45 times on September 23, the second day of bidding.
The IPO has received bids for 2 crore equity shares against offer size of 1.37 crore equity shares, the subscription data available on the exchanges showed. The offer size excluded anchor investors' book.
The company has already raised Rs 180 crore from anchor investors on September 21.
The response from retail investors have been strong to every IPO this year. The portion set aside for retail investors has subscribed 2.79 times so far, while the reserved portion of non-institutional investors witnessed 30.3 percent subscription, but qualified institutional buyers have not started bidding yet.
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The public issue of Angel Broking comprises a Rs 300 crore fresh issue and Rs 300 crore offer for sale. Company will utilise the fund for capital requirement and general corporate purposes. The price band has been fixed at Rs 305-306 per share.
"At upper price band the issue is valued at P/E multiple of 23.1x. As Indian broking industry is just on the influx point and should witness growth from here onwards on the back of lower interest rates, increasing literacy rate and Sebi's focus on protecting the investors. However, there has been huge competition in the industry which affects the pricing of most broking firms. Angel Broking which has taken price drops in order to acquire the clients and stay competitive in the industry, particularly from the zero brokerage firms," Ashika Stock Broking said.
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Incorporated in 1996, Angel Broking offers broking, margin funding, advisory and financial services under the brand names of "Angel Broking" and "Angel Bee" powered by "ARQ".
It has a strong market presence with active clientele on the National Stock Exchange (NSE) with a market share of around 6.3 percent and 2.15 million operational accounts as of June 2020.
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Digital transformation has helped it being the 4th largest company in terms of active NSE clients and 2nd largest in terms of incremental NSE clients in Q1FY21. Angel Broking being a pioneer in new client activation has access to approximately 79.55 million subscribers through partnered Digital Referral Associates (DRAs) as of June 30, 2020.
From Q1 FY20 to Q1 FY21, its average daily turnover has been increased from Rs 25,300 crore to Rs 61,900 crore. Company has strong capabilities to acquire customers through diversified digital platforms. In Q1 FY21, 85.21 percent of clients have been acquired digitally and remaining 14.79 percent are acquired through network of authorized persons.
KR Choksey believes the company will continue to update products and services as per industry requirements to be competitive in the industry while pursuing to deliver high ROEs for the company (over 14 percent since FY18). "Additionally, it has paid dividends to its shareholders for last 3 years sustaining more than 20% of dividend payout ratio. Thus, IPO valuation of around 25x FY20 annualised EPS, we recommend subscribe to the issue with long term positive view."
Edelweiss Capital, ICICI Securities and SBI Capital Markets are the book running lead managers to the issue, while Link Intime India is the registrar.