Angel One soars 9% post Q2 results, Motilal Oswal Financial hits new high

Angel One shares have rallied by up to 9 per cent on the BSE in Tuesday’s intraday trade after the company reported a healthy 44 per cent year-on-year (YoY) jump in its consolidated profit after tax (PAT) at Rs 423.4 crore in September quarter (Q2FY25). Total income of the stock broking and allied services company grew 8 per cent YoY at Rs 1,516 crore during the quarter.

Angle One reported continued healthy performance on the back of strong client acquisition (around 3 million customers in Q2FY25), and an increase in client funding book (approximately 25 per cent sequentially). The number of orders increased 5.8 per cent quarter-on-quarter (QoQ), primarily led by improvement in the cash segment.

With a 19.3 per cent share in overall retail equity turnover, the company's management said it continues to report an improvement in market share across all segments.

The stock price of Angel One has rallied 9 per cent to Rs 2,975 on the BSE in intraday trade today. It was trading higher for the fourth straight day, surging 15 per cent during the period. The stock had hit a 52-week high of Rs 3,900.35 on January 9, 2024.

Brokerage firm Motilal Oswal Financial Services said Angel One’s gross broking revenue came in at Rs 940 crore, up 29 per cent YoY (4 per cent below estimates), driven by continued growth in the futures and options (F&O) segment, which was up 23 per cent YoY (9 per cent below estimates); apart from a strong growth in the cash segment, which was up 52 per cent YoY (16 per cent better than estimates); and robust growth momentum in the commodity segment, which gained 93 per cent YoY (39 per cent better than the brokerage firm’s estimates).

Angel One has demonstrated its ability to protect profitability by taking corrective pricing actions to offset the impact of true-to-label charges regulations.

Going forward, the impact of the new F&O regulations for index options—wherein the number of weekly expiries will be restricted to one per exchange and lot sizes will be increased to Rs 15 lakh to Rs 20 lakh, along with other measures—is expected to impact volumes for companies operating in the sector.

Angel One will decide on its pricing action to offset the impact of these measures post implementation.

Nevertheless, the company has maintained that over the longer term, margins will be brought back to 45-50 per cent. Further, new businesses such as distribution of loans, fixed deposits, wealth management, and Asset Management Company (AMC) are likely to gain traction over the medium term, Motilal Oswal Financial Services (MOFSL) said in the company's results update.

Meanwhile, shares of MOFSL hit a record high of Rs 873.40, as they surged 6 per cent on the BSE in today’s intra-day trade. In the past six trading days, the stock has soared 24 per cent.
Last month, India Ratings and Research Private (India Ratings) had revised the credit rating outlook of MOFSL's debt instrument(s) from 'Stable' to 'Positive'.

The ratings agency cited positive outlook factors such as a scale up of the overall group revenue and profit pools across different segments, apart from a seasoned management team, a sizeable investment book, market share gains across businesses, strong revenue per customer in the broking business compared to peers, along with a sizeable lending businesses across capital markets and the housing subsidiary, as reasons for the rating upgrade.

With an increasing retail participation in the past three years across discount brokerages, there could be a gradual migration of clients towards full-service providers, benefitting the MOFSL Group due to evolving regulations for discount brokers.

Given the volatility in the financial market business, such as private wealth, asset management and wealth management, MOFSL's volume could see certain moderation.

However, the benefit of a widening of participation in the equity markets would stand to accrue on a recurring basis and operating leverage benefits of an established franchise would continue to play out for MOFSL, India Ratings had said while announcing the ratings upgrade.

Meanwhile, JM Financial hit a 52-week high of Rs 164.95, and rallied 6 per cent on the BSE in intraday trade. IIFL Securities soared 5 per cent to Rs 419.05, followed by 360 One WAM (up 5 per cent at Rs 1,120), Aditya Birla Money (up 4 per cent at Rs 162.20) and Emkay Global Financial Services (up 2 per cent at Rs 249.40).

In comparison, the BSE Sensex was down 0.03 per cent at 81,947, at 09:51 AM.