Angel One plunges 10% on sharp margin contraction in Q3

The sharp margin contraction has been attributed to higher operational expenditure due to increased client acquisition

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Shares of Angel One plummeted nearly 10 percent in the opening trade on January 16, a day after the broking company reported a sharp margin contraction in the October-December quarter.

The company’s operating margin slumped to 37.60 percent in the third quarter, down from 43.3 percent in the year ago period. Brokerage firm Motilal Oswal Financial Services attributed higher operational expenditure due to increased client acquisition as the major drag on profitability.

At 9.38 am, Angel One was trading at Rs 3,548 on the National Stock Exchange, down 8.46 percent from the previous close.

Despite a weak operational performance, the broking company managed to record a 14 percent on-year rise in its consolidated net profit at Rs 260.3 crore.

Revenue also surged 41.9 percent on year to Rs 1,059 crore, up from Rs 7,486 crore in the corresponding quarter last year.

The broker’s client base expanded 55.5 percent from year-ago period to 1.95 crore. Its share in India’s dematerialised account base improved 241 basis points to 14 percent.

One basis point is one-hundredth of a percentage point.

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“In Q3, we acquired more than a million clients in a month and 2.5 million clients in a quarter for the first time, accounting for nearly a quarter of the industry’s net client addition,” Angel One chairman & managing director Dinesh Thakkar said in an exchange filing.

MOFSL also sees Angel One as a perfect play on the financialisation of savings and digitisation. “It demonstrated a strong performance in Q3 with markets hitting an all-time high. The management continues to invest in technology to strengthen its position,” the firm said in a note. However, the brokerage also said the company’s client addition trajectory and the activation rate slowed down in recent quarters.

MOFSL has a “buy” call on the stock with a price target of Rs 3,976.

Also Read | Angel One Q3 net profit jumps 14% on year to Rs 260 crore

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