All You Need To Know About Angel Broking IPO

Angel Broking Ltd. will launch its three-day initial public offering on Sept. 22—India’s seventh since the Covid-19 outbreak and the fifth in September.

The company said it would use the offering’s proceeds to meet working capital requirements and general corporate purposes.

ICICI Securities Ltd., Edelweiss Financial Services Ltd. and SBI Capital Markets Ltd. are the book running lead managers to the issue.

Business

Angel Broking, which was incorporated in August 1996, provides broking and advisory services, margin funding, loans against shares, and distributes financial products to its clients. Broking services are offered through its online and digital platforms, and its network of more than 11,000 sub-brokers, as of June 30.

India’s leading brokerage in terms of authorised persons registered with the NSE managed assets for clients worth around Rs 13,254 crore and has over 2.15 million operational broking accounts as of June 30. Its distribution business involves selling third-party mutual funds and life and health insurance products to clients.

The company has 6.3% market share in terms of active clients on the NSE as on June 30, according to data available on the exchange’s website.

The company has onboarded almost 85% of its clients in its digital platform in the quarter ended June, with average monthly client additions at 115,655—a 2.5 times growth over the last fiscal, according to its red-herring prospectus.

Financials

Angel Broking’s revenue and net profit contracted at an annualised rate of 1.78%,and 8.86%, respectively, during the three years through March 2020, while income from broking services grew 1.71%. Its growth in the quarter ended June was aided by increased participation retail investors.

Peer Comparison

Angel Broking’s listed peers include ICICI Securities Ltd., Geojit Financial Services Ltd., IIFL Holdings Ltd., Motilal Oswal Financial Services Ltd. and JM Financial Services Ltd., while its unlisted competitors include discount brokers like Zerodha, RKSV Securities and 5Paisa Capital. Other traditional broking unlisted peers include HDFC Securities Ltd., Kotak Securities Ltd., Aditya Birla Money Ltd. and Axis Securities.

Key Risks

• Significant proportion of revenue is derived from brokerage business which derives from relatively few clients, leading to risk of concentration.
• Broking business is highly dependent on the levels of activity in securities market.
• Business activities are subject to extensive supervision and regulation by government and market regulator.