Is Angel One's Gain Zerodha's Loss?

Angel One moved up in the pecking order to rank behind Groww and Zerodha by investor count in October

<div class="paragraphs"><p>Photo: BQ Prime</p></div>
Photo: BQ Prime

Shares of Angel One Ltd. rose as much as 10% on Wednesday after reporting growth in its client base in November. That's just the latest indicator of the progress the broker has made in the past year.

Angel One moved up in the pecking order to rank behind Groww and Zerodha by investor count in October. The same month, Groww overtook Zerodha.

In fact, Angel One reported growth in its client base and order numbers a day after Zerodha Chief Executive Officer Nithin Kamath apologised to users for technical issues on Nov. 6 and a second one on Dec. 4.

While Angle One's growth can't be attributed to Zerodha's tech glitches, it underscores intense competition among India's top three discount brokers.

The top five digital brokers accounted for 63% of the NSE active client base as of the quarter ended in September, up from 54% a year earlier, according to NSE data.

Over 70% of new NSE active clients opt for the top five digital brokers. Angel One is the second most preferred by clients, according to its investor presentation. Angel One boasted a 14.6% market share as of September, a rise of 5.27 percentage points from 9.3% a year ago.

Robust Monthly Performance

A transition to a digital model has helped Angel One ratchet up the pace of its client acquisitions this year. November numbers mirror that growth:

  • It reported a 51.3% year-on-year rise in its client base in November at 1.85 crore.

  • The company's gross client acquisition also surged 114% to 6.8 lakh.

  • The number of orders on the platform also jumped 51.4% year-on-year to 10.72 crore.

While the overall average daily turnover grew 9% over the previous month, it surged 165% year over year to 34,36,300 crore. Futures and options dominated the turnover, contributing 98.76%.

Benefits of Going Digital

Angel One's client revenue has spiked after going digital. For every Rs 100 generated from a client in the first year, the company can now predict a revenue of Rs 63 in the fourth year, compared with Rs 26 before going digital.

  • In the second quarter ended September, Angel One's revenue rose 41% year over year to Rs 1,049.3 crore and its net profit jumped 43% to Rs 304.5 crore.

  • In comparison, Zerodha's net profit increased 39% to Rs 2,907 crore, and Groww's net profit rose from Rs 6.8 crore to Rs 73 crore.

  • Angel One's total client base expanded 13.3% sequentially to 1.71 crore and its NSE active client base jumped 10% to 49 lakh in the second quarter.

Maintaining consistency, Angel One paid a dividend with a 35% payout ratio. The dividend per share increased to Rs 12.70, up from Rs 9.70 per share a year ago.

A Better Fee Structure?

Angel One introduced a completely new fee structure in 2019. The discount broker currently offers zero-cost services for trades executed in cash delivery and a flat fee of Rs 20 per order for intraday, F&O, currency and commodities segments.