Angel Broking is coming out with an IPO to raise Rs 600 crore which consists of a fresh issue of Rs 300 crore and an offer for sale of Rs 300 crore by promoters and investors. The issue opens to public on Tuesday 22nd Sept and closes on Thursday 24th of September. It has a price band set at Rs 305 to 306 Rs per share with a lot size of 49 shares. Proceeds of the fresh issue will be utilized to meet working capital requirements and general corporate purposes.
Incorporated on August 8, 1996, Angel Broking Limited is one of the largest independent full-service retail broking house in India in terms of active clients. Angel is a technology led financial services company that provides broking and advisory services, margin funding, loans against shares and financial products distribution to its clients under the brand “Angel Broking”. Its broking services are offered through (i) its online and digital platforms, and (ii) its network of more than 11,000 sub-brokers, as of June 30, 2020. Angel has more than 43,90,000 downloads of its Angel Broking mobile app and nearly 10,00,000 downloads of its Angel BEE app as of June 30, 2020, which enables its clients to avail the services digitally.
Angel BEE is a digital platform, developed with an aim to fulfill the financial requirements of its clients, with a focus on millennials, by inculcating investment discipline and providing avenues for independent financial management. It offers instant, “on-the-go”, paperless and personalized solutions through which clients can manage their financial portfolio. Activation of an account by a client on Angel BEE is a paperless and seamless process.
Digital marketing has enabled the company to garner 39.8 crore digital impressions in June, 2020 on its various online and digital platforms. Their customer outreach, spans across approximately 96.87% or 18,649 pin codes in India as of June 30, 2020. Angel manages Rs 13,254 crore in client assets and over 2.15 million operational broking accounts as of June 30, 2020.
Angel’s experience of over 2 decades has helped them to integrate its knowledge and expertise in the broking industry with the technology they provide to its retail clients through various platforms. They have enhanced client engagement and experience through application of technology to broking services including, launch of its mobile application for its 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.
One of the largest retail broking houses with strong brand equity: Company’s online and digital platforms, along with its vast network of Authorized Persons enables them to reach a large population of retail clients spread across approximately 96.87% or 18,649 pin codes in India. This widespread reach has enabled them to enhance its client base by 36.81% CAGR from 1.06 million in FY18 to 2.15 million as on June 30, 2020.
Ensuring client satisfaction through the implementation of advanced technology and digitalization: Angel has successfully implemented technology to the broking and advisory business in India, from acquisition of clients to the settlement of trades, remittance of funds and providing its clients with necessary data and reports to ensure that its clients are provided with customized and holistic solutions.
Client acquisition through diversified digital platforms: Angel has strong capabilities to acquire customers through various diversified digital platforms. From Q2 FY 20 to Q1 FY21, 85.21% of its clients have been acquired digitally, of which, 53.31% are acquired through performance marketing, either by way of organic or paid leads, 20.72% through referrals from its existing clients and 11.18% through digital influencers.
Diversified product offering across segments at competitive price : Company’s online platforms, “Angel Broking”, “trade.angelbroking.com”, “Angel SpeedPro” and “Angel BEE”, powered by ARQ, allow them to provide their clients with an ability to manage their wealth and investments in an efficient and organized manner. Angel also facilitates participation in initial public offerings. Its Angel iTrade Prime Plan was launched comprising, ? 0 for equity delivery and ? 20 per order for all other segments.
Robust business metrics building operating leverage: Company’s well executed strategy of being a digital first organisation enabled them to grow its business exponentially, for example, Angel witnessed a growth of nearly 2.5 times in its average monthly gross client acquisition run rate to 115,565 in Q1 FY21 from an average monthly gross client acquisition run rate of 46,676 in FY20. The average daily turnover grows from ? 25,317.6 crore in Q1 FY20 to ? 61,894.5 crore in Q1 FY21, as well as placed Angel at the forefront in the turnover based market share for the retail broking industry in India.
General economic and market conditions in India and globally could have a material adverse effect on the business, financial condition, cash flows, results of operations and prospects: Broking business is highly dependent on economic and political conditions and thus the performance of the stock markets. Any adverse change in global scenario may impact the volume of financial assets traded, the number of listed securities and liquidity of the listed securities which would adversely affect the broking business.
Concentration Risk: Also the company faces concentration risk as it relies a lot on its broking business, which contributes 72.21% to the total income. Again any adverse impact on market conditions may affect the profitability of the segment.
The Company, some of its Directors, Promoters, Subsidiaries and certain Group Companies are involved in legal and other proceedings. Lalit T. Thakkar, one of the members of the Promoter Group and one of the Selling Shareholders, has in the past been debarred from accessing capital markets.
From a valuation perfective Angel Broking is valued at a price to earnings multiple of 26.6 times which is slightly higher than expected .The company is well placed when compared to its peers. But keeping the risks in mind, we recommend market participants to subscribe to this IPO for listing gains only. Long term investors can track the company’s performance going forward and make the decision as per their risk appetite.