Buy Angel One; target of Rs 1800: HDFC Securities

HDFC Securities' research report on Angel One

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).

Outlook

Given 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).