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Subscribe to Angel Broking: Motilal Oswal

Motilal Oswal has come out with its report on Angel Broking. The research firm has recommended to ''Subscribe'' the ipo in its research report as on September 21, 2020

September 22, 2020 / 02:19 PM IST

Motilal Oswal's IPO report on Angel Broking

Angel Broking Ltd (Angel) is one of the largest independent full-service retail broking house in India in terms of active clients on NSE (June’20). Leading retail focused broking house with advanced technology: Angel is the 4th/2nd largest player in terms of NSE active clients/incremental NSE active clients as on June’20 (7.7lakhs/1.9lakhs). It has pan-India presence through vast network of Authorised Persons and thus grew its client base at 37% CAGR over FY18-Q1FY21 to 2.2mn. Angel has enhanced the client engagement through process digitization and expansion of technological platforms. Infact, 85% of its clients in last one year were acquired digitally. Angel has also managed to increase its monthly average online order execution of direct clients to more than 99% in Q1FY21.

Valuation and Outlook

At the higher end of the price band, the issue is valued at 29x FY20 P/E (fully diluted), which is seems fairly priced. We like Angel given its (1) leading position in retail broking, (2) robust technology platform and (3) innovative offerings. Considering the sharp rise in retail participation and ongoing industry challenges, top players are likely to gain market share. Hence, investors can Subscribe to the IPO. Risk: (1) Revenue concentration, (2) Client concentration, (2) Highly competitive industry and (3) legal/other proceeding against promoters.