Rs 12.70/Share Dividend Ahead: Angel One Stock Falls 14% Due To Q3 PAT Decline; Motilal Oswal Recommends Buy

Leading stock broker, Angel One witnessed a free fall on Tuesday's trading session after higher CIR adversely impacted profitability in Q3 of FY24. On Tuesday, Angel One share price nosedived by nearly 14% to hit an intraday low of Rs 3,340.30 apiece on BSE. The drop in operating profit and PAT in Q3FY24, offset the impact of good news of dividend payout to the tune of Rs 12.70 per share ahead. Nonetheless, there is a buy-on-dips opportunity in Angel One.

Angel One Share Price:

At the time of writing, Angel One's share price traded at Rs 3,363 apiece, down by 13.21% on BSE with a market cap of Rs 28,232.54 crore. In a year, however, Angel One has emerged as a multibagger with an upside of over 155.4% on this exchange.

Angel One Q3 Results:

In Q3FY24, Angel One posted 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.

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.

Dinesh Thakkar, Chairman & Managing Director said, "Angel One has always focused its efforts to offer clients the most suitable products, in a seamless and efficient manner, by harnessing the power of data and technology. Our digital assets are continuously evolving, enriched with innovative features to ensure an unparalleled investing experience. We undertook process improvements, to ease the onboarding experience and incorporated some unique features, for both new and experienced clients, thus simplifying their investment journey on the app. These focused efforts yielded into sustained improvementin our NPS and Playstore and Appstore rankings."

Further, Thakkar said, "I am delighted with our historic performance in Q3 '24, as 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 Third Interim Dividend:

Coming to dividends, the company's board of directors 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.

As per the regulatory filing on January 15, the board declared a third interim dividend of Rs 12.70 per share for the financial year FY24. The face value is Rs 10 per share each.

Additionally, the company 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.

However, 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.

Earlier, the company paid the first and second interim dividends of Rs 9.25 per share (92.5%) and Rs 12.70 per share (127%) for FY24.

On the current market price, Angel One's dividend yield is at 1.19%.

Buy-On-Dips Strategy In Angel One:

In its report dated January 16, Motilal Oswal highlighted that Angel One's gross broking business witnessed a 39% YoY growth, primarily driven by the F&O segment (up 42% YoY and 6% below our estimates) at INR 5.9b and the cash broking segment (+27% YoY and 10% below our estimates) at INR 0.8b. Also, interest income came in at INR 2.1b, a growth of 55% YoY and 17% QoQ. MTF book stood at INR18.6b vs. INR14b in 2QFY24.

In regards to OPEX, Motilal pointed out total Opex increased 75% YoY to INR4.6b (13% higher than our estimates). This is because admin & other expenses came in 17% higher than expectations, which led to an increase in CIR to 56%.

Moreover, Motilal mentioned that Angel One's market share has increased across segments. They are:

- ADTO stood at INR35.9t, up 22% QoQ and 148% YoY. The total number of orders increased to 350m in 3QFY24 from 338m in 2QFY24.
- Its F&O market share improved to 26.8% from 26.2% in 2QFY24. F&O ADTO grew 22% QoQ and 151% YoY to INR35.5t. The number of orders was flat at 262m (264m in 3QFY24). Revenue per order declined to INR22.7.
- Cash ADTO market share improved to 15.1% from 14% in 2QFY24. Cash ADTO increased 17% QoQ to INR55b (up 53% YoY). The number of orders increased 19% QoQ (up 68% YoY) to 74m. However, revenue per order declined 24% YoY to INR10.5
- Market share for ANGELONE in the Commodity segment increased to 58.3% in 3QFY24 from 56.6% in 2QFY24.

On the valuation, Motilal said, "ANGELONE is a perfect play on the financialization of savings and digitization. It demonstrated a strong performance in 3QFY24 with markets hitting an all-time high. The management continues to invest in technology to strengthen its position. However, its client addition trajectory and the activation rate have slowed down. We look to review our estimates and TP post the concall on 16th Jan'24." That being said, Motilal Oswal has recommended buying on Angel One shares.

Disclaimer: The recommendations made above are by market analysts and are not advised by either the author nor Greynium Information Technologies. The author, nor 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.