Top Brokerage Bullish On Midcap Stock Amid Strong performance, Maintains Buy For Robust 53% upside

ICICI Securities maintains its bullish outlook on Angel One Ltd. The brokerage assigns a buy on the stock of the company with a market capitalisation of Rs 1,980/share. With the given target price, it could fetch gains up 53% from its current level. According to the brokerage, the Q3FY23 PAT of Rs 2.3bn beat the estimate. Angel One is a midcap stock that operates in the Financial Services sector engaged in Broking & Allied Services. It has a market capitalisation of Rs 10,714.01 crore.

Stock Outlook & Returns

The stock of Angel One is currently trading at Rs 1283.25/share, down 0.75% from the previous close. It was opened at Rs 1,295/share, while the previous close was 1,292.90/share. It recorded its 52 week low on 20 June 2022 at Rs 1,066/share and 52 week high on 29 April 2022 at Rs 2,022/share, respectively.

It was listed on 5 October 2020. Since its listing on NSE, the stock has given 365.92% returns. However, it has fallen 11.92% in the last 1 month and 20.04% in the last 3 months, respectively. It has fallen 7.15% in the last 1 year.

 

Q3FY23 operating highlights

1) Gross client addition dipped 16% QoQ to 1mn in Q3FY23 while active ratio slid from 38.7% in Q1FY23 to 36.2% in Q2FY23 and 33.9% in Q3FY23.

2) Age-wise net brokerage revenue mix indicates higher proportion of 2-5 years vintage clients in Q3FY23 indicating stable activity with maturity.

3) Number of orders declined 1.4% QoQ.

4) Median age of clients acquired remained low at 29 years.

5) Digital-focused talent pool stood at 663 as of Q3FY23 vs 633 in Q2FY23.

6) App installs stood at 31.7mn in Q3FY23 vs 28.6mn in Q2FY23.

7) Employee count fell to 3,112 in Q3FY23 from 3,120 in Q2FY23.

Strong performance continues

Angel One (Angel) continued with its strong performance in Q3FY23 in terms of client additions (average of ~1mn per quarter in 9MFY23), growth in the number of orders (average monthly run-rate of ~74mn in 9MFY23) and cost discipline (total 'opex to sales' of 48% in 9MFY23). These strides are reflected in 9.5% and 11% increase in our EPS estimates for FY23E and FY24E respectively. Our optimism has also been inspired by the robust growth in overall equity option volumes on NSE (126% CAGR over past two years).

 

Buy for a target price of Rs 1,980/share

ICICI Securities said, "We remain positive on Angel considering its track record (~3x growth in number of orders over past two years) and strong position (21.5% retail volume share as of Q3FY23). Risks include sharp drop in market volumes and any regulatory action to curb volume growth (especially in equity options). We factor-in a 19% earnings CAGR over FY22-FY24E and expect PAT of Rs9.4bn in FY24E. Maintain BUY with a target price of Rs1,980 (unchanged) based on 18x FY24E EPS (20x earlier) of Rs110. The cut in multiple is due to the near-term risk of lower order growth on a high base."

 

Disclaimer

The stock has been picked from the brokerage report of ICICI Securities. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.