Angel Broking Limited, started in 1996, is one of the largest retail broking houses in India in terms of active clients on NSE as of June 30, 2020 as per CRISIL Report. It's a technology-led financial services company providing broking and advisory services, margin funding, loans against shares (through one of the Subsidiaries, AFPL) and financial products distribution to the clients under the brand 'Angel Broking'. The broking and allied services are offered through (i) the online and digital platforms, and (ii) its network of over 11,000 Authorised Persons, as of June 30, 2020. Company's customer outreach, spans across approximately 96.87% or 18,649 pin codes in India as of June 30, 2020. They manage Rs 1,32,540 million in client assets and over 2.15 million operational broking accounts as of June 30, 2020. Angel launched its mobile application for broking services in the year 2011 and KYC authentication and complete client on-boarding through the electronic and digital medium in the year 2015 and 2016, respectively. The primary focus is to profitably grow its retail broking, margin funding and distribution businesses through the online and digital platforms, 'Angel Broking MobileApp', 'trade.angelbroking.com', 'Angel SpeedPro', 'Angel BEE', which are powered by 'ARQ', a rule-based investment engine. Angel provides a wide range of financial services to the clients including and in relation to:1. Broking and Advisory: They provide broking services across equity (cash-delivery, intra-day, futures and options), commodity and currency segments, along with debt products. To complement the broking and advisory services, they also provide the following additional services to the clients:(a) Research Services: As of June 30, 2020, they have a dedicated research team of 54 members who cater to quantitative and qualitative research requirements relating to the stock market such as equity fundamentals, technical, derivatives, commodities currencies and mutual funds.(b) Investment Advisory: They provide investment advisory services to the retail clients with customized investment recommendations aided by the rule based investment engine 'ARQ', which they believe assists their clients in achieving their investment goals across various investment avenues such as equities, debt, currency, commodities, derivatives, mutual funds and insurance products.(c) Investor Education: Company's website, www.angelbroking.com, is also a knowledge center which aims to empower investors, including the clients, with an understanding in respect of trading and investments products. 2. Other Financial Services: In addition to the broking and advisory services, they also provide the following financial services that may enable the clients to achieve their financial goals:(a) Margin Trading Facility: They provide margin trading facility to the clients for leveraging their eligible collaterals by funding their requirements on the cash delivery segment of equities. Such funding is subject to exposure against margins that are mandated by the stock exchanges, with the securities forming a part of the collateral for such funding.(b) Distribution: They undertake distribution of third-party financial products such as mutual funds, and health and life insurance products, according to the clients' requirements. (c) Loans against shares: Through the Subsidiary, AFPL, which is registered as an NBFC, they provide loans against shares to the retail clients. Company's base of NSE active clients witnessed growth from 0.36 million in March, 2018, 0.41 million clients in March, 2019 to 0.58 million clients in March, 2020 and further to 0.77 million clients in June, 2020. Due to the growing base of NSE active clients, the market share and rank improved to 6.29%,registering an increase of 95 bps in June, 2020 over March, 2020, and 4th position respectively in NSE active clients. The overall traded client base also registered a 30.21% growth as of June 30, 2020 as compared to March 31, 2020. On financial performance front, Angel has posted turnover/net profits of Rs. 546.07 cr. / Rs. 31.01 cr. (FY17), Rs. 779.99 cr. / Rs. 107.31 cr. (FY18), Rs. 784.11 cr. / Rs. 79.58 cr. (FY19) and Rs. 754.71 cr. / Rs. 81.39 cr. (FY20). For Q1 FY21, it has posted total revenue of 246.60 Cr with net profit of 46.85 Cr. Thus company has posted muted growth over last couple of years. Company has posted an average EPS of Rs. 11.90 and average RoNW of 15.74% for last three fiscals. Issue is priced at a P/BV of 3.63. If we attribute latest earnings of FY20 on fully diluted equity post issue, then asking price is at a P/E of around 31 and with annualised FY21 earnings P/E is 13, so this IPO looks fairly priced. The comparison between peers is shown in above table. On BRLM's front, three BRLMs are associated with this IPO, and have handled around 22 IPOs in last three fiscals, and from last 10 IPOs, 5 opened below issue price and remaining opened above issue price on the day of listing. As of now, from last 10 IPOs, 2 are trading below issue price and remaining above issue price. ( As on 18.09.2020 ) As per financials, company's long term growth and very short term growth is good, RoNW is 16% for last three fiscals, finance cost is high and issue is priced at P/E of around 31 as per FY20 and at P/E of around 13 with annualized FY21 earnings. So as per listed peers it looks fully priced. In BHARAT, there is high growth opportunity for retail broking, but competition is also very tough due to new players. So we give NEUTRAL rating to this IPO.
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