Shares of Angel Broking (ABL) hit a new high of Rs 1,192.35, ralling 12 per cent on the BSE in the intra-day trade on Friday, after the brokerage firm reported strong earnings for the quarter ended June 2021 (Q1FY22). The company is one of the largest retail broking houses in India, in terms of active clients on the National Stock Exchange (NSE).
In the past three months, the stock has zoomed 300 per cent, as compared to a 9 per cent rise in the S&P BSE Sensex. At 10:38 am, the stock erased gains partially and traded 6 per cent higher at Rs 1,123, as compared to a 0.08 per cent gain in the benchmark index. A combined around 790,000 shares have changed hands so far on the NSE and BSE.
In Q1FY22, Angel Broking’s net profit more-than-doubled at Rs 121.4 crore from Rs 47.3 crore in Q1FY21. On a sequential basis, profit grew 19 per cent from Rs 101.9 crore in Q4FY21. Gross revenues grew 92 per cent year-on-year and 13 per cent quarter-on-quarter at Rs 474.50 crore.
The income growth was aided by strong growth in client base and high client activity. The company clocked a strong gross client addition of 1.20 million in Q1FY22 as compared to 0.96 million clients in Q4FY21. Earnings before interest, taxes, depreciation and amortization (Ebitda) margin remained stable at 49 per cent.
The management said the company is witnessing a greater acceptance of equities, as a vehicle of wealth creation, by more people from Tier 2, 3 and beyond cities. The company’s growth is backed by their transformation into Digital First and Fintech business model, extensively using Artificial Intelligence and Machine Learning, to give their clients the best experience.
Analysts expect the company’s growth to continue due to systemic under penetration as falling interest rate cycle, coupled with low returns from traditional investment instruments such as gold and real estate, has led to shift in retail investor interest to the capital markets.
The successful transformation of the business model underlines execution capability of the franchise in retail broking space. Appointment of Narayan Gangadhar as its new CEO (strong tech experience with Google, Amazon, Uber and Ola) holds promise as Angel Broking seeks to further build digital capabilities, they say.
“India’s young population is typically more technology-savvy and, with increasing using of wireless broadband internet, internet and mobile trading should get a boost. Fintech companies have played a significant role in the growth of brokerage market, which was backed by low cost and high speed internet. Digitalisation drive has enabled shift of client acquisition, operations and client servicing to digital platforms enabling scale and, in turn, operating leverage,” ICICI Securities had said in a May 2021 note.