Subscribe to Angel Broking: KR Choksey

KR Choksey's IPO report on Angel Broking

Angel Broking Limited incorporated in 1996 and one of the oldest stock broking houses in India. It 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% and 2.15 million operational accounts as of June 2020. 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 INR 253 bn to INR 619 bn. Company has strong capabilities to acquire customers through diversified digital platforms. In Q1 FY21, 85.21% of clients have been acquired digitally and remaining 14.79% are acquired through network of Authorized Persons.

Valuation and Outlook

We believe 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 ( >14% 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 ~25x FY20 annualised EPS, we recommend SUBSCRIBE to the issue with long term positive view.