Buy Angel One; target of Rs 4100: Motilal Oswal

Motilal Oswal's research report on Angel One

2QFY25 PAT grew 39% YoY to INR4.2b (5% beat), aided by better-thanexpected operational efficiency. Revenue from operations jumped 45% YoY to INR9.8b, largely in line with our estimate. The total number of orders increased to 489m in 2QFY25 from 338m in 2QFY24 (up 45% YoY). Gross broking revenue per order declined 11% YoY to INR19.1, led by a 19% drop in cash segment and a 7% fall in F&O. Total operating expenses rose 51% YoY (5% below our estimates). The CI ratio increased YoY to 50.1% from 48.7% in 2QFY24 (better than our estimate of 52.5%). The management expects a hit of ~13-14% in broking and related income due to new F&O regulations. The wealth segment is expected to achieve a breakeven in the next three years, while other new businesses could achieve a breakeven in two years. We now factor in a 6%/10% QoQ decline in F&O orders in 3QFY25/4QFY25. We also assume a price hike of INR3/order in 1QFY26. As a result, we cut our EPS estimates by 9%/12% for FY25/FY26. Upsides could come from revenues from new segments, which we are yet to factor in.

Outlook

Given that regulatory uncertainty is now behind and management guidance on revenue impact is relatively softer, we raise our TP to INR4,100 based on 18x Sep’26E EPS. Maintain BUY.