127% Dividend: Buy-On-Dips Strategy In Financial Stock Ahead Of Record Date Next Week; 22% Potential Upside

Leading stockbroker, Angel One witnessed a selling pressure on Saturday's trading session. This has created a buy-on-dips opportunity in Angel One's share price as brokerage Motilal Oswal has set a target price of Rs 4,000 on the stock after Q3 results. This implies a potential upside of 22% from current market price levels. Angel One share will trade ex-dividend next week for its third interim dividend of Rs 12.7 per share for FY24.

Angel One Share Price

At the time of writing, Angel One shares traded at Rs 3,283.15 apiece, down by Rs 53.65 or 1.61% on BSE with a market cap of Rs 27,562.19 crore. The stock price has dipped by at least 2% to hit an intraday low of Rs 3,270 apiece.

Angel One has been in focus after it declared its Q3 results for FY24 and rewards for investors in the form of dividends.

Angel One Dividend

The stock broker has approved the distribution of 41% of the quarter's profit as a third interim dividend, reaffirming Angel One's commitment to delivering value to its shareholders. That being said, the board declared a third interim dividend of Rs 12.70 per share for the financial year FY24 at a face value of Rs 10 each.

For the said dividend, Angel One fixed January 23 as the record date to determine the eligibility of shareholders for payment of the said Interim Dividend. The company will also turn ex-dividend on January 23.

In case of payout, the company said, the dividend shall be paid on or before February 14, 2024, to those members, whose names appear on the Register of Members or in records of Depositories as beneficial owners of the shares as of the closure of business hours of Tuesday, January 23, 2024.

In FY24, so far, the company has already paid the first and second interim dividends of Rs 9.25 per share (92.5%) and Rs 12.70 per share (127%).

Angel One Q3 Results:

In the third quarter of FY24, the company logged a 14% sequential decline in PAT to Rs 260.3 crore as against Rs 304.5 crore in Q2FY24. Also, EBITDA declined sharply by 13% to Rs 364.1 crore in Q3 of the current fiscal, compared to Rs 418.5 crore in the preceding quarter. Furthermore, revenue growth was broadly marginal by 1% to Rs 1,060.8 crore in Q3FY24 versus Rs 1,049.3 crore in Q2FY24.

For the quarter, Angel One highlighted that higher growth in cash segment orders, coupled with modification in cash intraday tariff structure and higher client acquisition led to higher OPEX. These factors dragged the financial performance in Q3FY24 on a quarter-on-quarter basis.

Should You Buy Angel One share price?

In its research report, brokerage Motilal Oswal said, "ANGELONE is undertaking a change in its business model wherein incrementally the focus will be on gaining market share in the cash segment along with strong growth in distribution revenues over the next 2-3 years."

Further, the brokerage highlighted that customer Acquisition costs for Angel One have not increased, and thus, lifetime
value justifies the cost of acquisition. The breakeven for cost of acquisition is steady at 6 months One is focused on scaling up the assisted business and building an ecosystem to offer a full product suite. This shall be achieved by deepening the channel partner network with multiple products and expanding geographical reach.

Also, it said, growth in the distribution segment will arise from loans, insurance and a few other products.

Nonetheless, Motilal has trimmed its FY24/FY25/FY26 earnings estimates by 6.8%/5.2%/3% to factor in higher operating
cost (employee & admin cost) on account of continued momentum in client acquisition and investments into new businesses.

"We reiterate our BUY rating on the stock with a revised TP of Rs 4,000 (premised on 20x Mar'26E EPS)," the brokerage said.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author or Greynium Information Technologies. The author, the brokerage firm nor Greynium would be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.