Angel Broking Limited IPO

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(i) Angel Broking is one of the largest retail broking houses in India in terms of active clients on NSE as of June 30, 2020.

(ii) They are a technology-led financial services company providing broking and advisory services, margin funding, loans against shares (through one of our Subsidiaries, AFPL), and financial product distribution to the clients under the brand “Angel Broking”.

(iii) Angel broking offers services through (i) Online and digital platforms, and (ii) Network of over 11,000 Authorised Persons (the “Authorised Persons”), as of June 30, 2020.

How does Angel broking make money?

Broking and Advisory- They provide broking services across equity (cash-delivery, intra-day, futures, and options), commodity, and currency segments, along with debt products.

(i) 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.

(ii) Investment Advisory: We provide investment advisory services to our retail clients with customized investment recommendations aided by our rule-based investment engine “ARQ”.

(iii) Investor Education: The website, www.angelbroking.com, is also a knowledge center that aims to empower investors, including our clients, with an understanding with respect to trading and investment products.

Other Financial Services:

(i) Margin Trading Facility- They provide margin trading facility to its clients for leveraging their eligible collaterals by funding their requirements on the cash delivery segment of equities.

(ii) Distribution: They undertake distribution of third-party financial products such as mutual funds, and health and life insurance products.

(iii) Loans against shares: Through its Subsidiary, AFPL, which is registered as an NBFC, they provide loans against shares to the retail clients.

The broking services contribute around 72% of the total income of Angel broking and rest 28% from other services.

Stats:

(i) They have more than 4.39 million downloads of the Angel Broking mobile application.

(ii) Nearly 1 million downloads of Angel BEE mobile application as of June 30, 2020, which enable the clients to avail services digitally.

(iii) Digital marketing has enabled the Company to garner 3.98 Crores digital impressions in June 2020 on its various online and digital platforms. The customer outreach spans across approximately 96.87% or 18,649 pin codes in India as of June 30, 2020.

(iv) They manage ₹ 13254 Crores in client assets and over 21 lakhs operational demat accounts as of June 30, 2020.

Objects of the Angel Broking Limited IPO:

1. OFS (300 Crores) 2. Fresh Issue (300 Crores) The Net Proceeds from the fresh Issue will be utilized towards the following objects: 1. To meet working capital requirements; and 2. General corporate purposes

Angel Broking Limited IPO Details:

Open Date: Sep 22 2020
Close Date: Sep 24 2020
Total Shares: 19607843
Face Value: ₹ 10 Per Equity Share
Issue Size: 600 Cr.
Lot Size: 49 Shares
Issue Price: ₹ 305-306 Per Equity Share
Listing At: NSE,BSE
Listing Date: Oct 05 2020

Promoters And Management:

(i) Dinesh D. Thakkar is the Chairman and Managing Director of the Company. He has cleared the Higher Secondary Certificate Examination from the Maharashtra State Board of Secondary and Higher Secondary Education. He has over 25 years of experience in the broking industry. He is also one of the Promoters of our Company. He has been a Director on our Board since October 23, 2007. (ii) Vinay Agrawal is a Whole Time Director and Chief Executive Officer of the Company. He holds a bachelor’s degree in commerce from the University of Mumbai. He is a qualified Chartered Accountant from the Institute of Chartered Accountants of India. He has over 18 years of experience in the broking industry. He has been a Director on our Board since October 23, 2007.

Financials of Angel Broking Limited IPO:

Particulars(in Million) Mar-18 Mar-19 Mar-20 Q1FY21
Revenue 7,536 7,626 7,427 2,440
Fees and Commission Expense 2,464 2,419 2,304 764
Employee Cost 1,154 1,513 1,510 356
Impairment on Financial Instrument 93 151 376 189
Other Expense 1,270 1,509 1,377 484
EBITDA 2,555 2,034 1,860 647
OPM 33.90% 33.90% 33.90% 33.90%
Interest Cost 894 662 488 85
Depreciation 182 181 201 48
Profit before tax 1,479 1,191 1,171 511
Tax 467 421 303 129
Net Profit 1,012 1,012 1,012 382
NPM 13.43% 10.10% 11.69% 16%
Shares 81.8 81.8 81.8 81.8
EPS in Rs 12.37 9.41 10.61 4.7
IZ View: 1. There is almost no growth in the top-line in the last 3 years. 2. The EBITDA Margin has also dropped from 33% in FY18 to 25% in FY20. 3. EPS for FY19-20 is 10.61. SO, asking P/E is 30x. 4. Mcap = 2500 Crores. Mcap/Revenue= 3.7x.

Comparison With Peers:

ICICI Securities the peer of Angel Broking is trading at 23x of P/E on 19.09.2020.

Recommendation on Angel Broking Limited IPO:

Review and Recommendation of InvestorZone are 3/10. The company has not shown any growth in the last 3 years. The brokerage business is highly competitive. The recent entry of Paytm money in the broking business will further reduce the margins going forward. A lot of litigation and criminal charges pending against the promoters and group companies. ICICI Securities is trading at a P/E of 24x and Angel Broking is asking a P/E of 30x, which does not look fair.

Registrar of Angel Broking Limited IPO:

  1. Link Intime India Private Limited

Discussion on Angel Broking Limited IPO:

    Can you also add q1fy21 numbers? That looks very impressive from top line and PAT perspectives.

      Risky. Global markets are down. Second wave of Corona is around the corner. We have seen the same today in Nifty as well.

    SEBI had, through an order, prohibited Lalit T. Thakkar, one of the members of Promoter Group and one of the Selling Shareholders, from accessing capital markets for a period of two years from July 30, 1999, for violation of the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 1995 by creating an artificial price rise and false market for the period December.1995 to January 1996 in the scrip of Magan Industries Finance Limited.