ANGELONE printed flat sequential growth in its top line due to slower retail derivatives ADTVs and weak ancillary transaction revenues. Given the sharp jump in derivative volumes in Dec-22, followed by similar trends in Jan-23TD, we upgrade our earnings estimates by 8/3% for FY23E/FY24E. Although ANGELONE is capitalising on industry tailwinds around all-time high options volumes, our analysis suggests that the company’s 12m-rolling activation rate has dropped to 24% (-813bps QoQ), suggesting elevated drop-off rates, calling for a cut in our target multiple to 15x (from 17.5x).
OutlookGiven the flat-fee model, a lean cost structure and its market leadership in retail derivatives, ANGELONE remains a convincing play on the Indian capital markets; maintain BUY rating with a revised target price of INR1,800 (15x Sep-24E EPS).
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