ValuePickr Forum

Angel One: Metamorphosis into a Fintech? (Previously Angel Broking)


Before we dive into the specifics of angel, a few words on the industry itself. Participants need to place orders on exchanges (stock, commodity etc). These happen through intermediaries called brokers. Brokers provide the UI/UX to the end participant to execute their trades. Traditionally, brokers have made money through 2 couple of major sources:

  1. Brokerage: In the olden days, brokers used to have “packs” (say X trades in Y days for Z rupees) and also provide custom plans to their clients with a focus on driving volume. This got disrupted with the advent of discount brokers like Zerodha (nice interview where one can hear from the horse’s mouth directly: The Success Story Of Zerodha's SMART Business Journey ft. Nithin Kamath | The Ranveer Show 68 - YouTube). Most brokerage houses now offer flat brokerage for some segments and 0 brokerage for others. The idea is, people who trade more, pay. People who are in it for buying and holding, anyway do not contribute volumes, let’s make that free (from brokerage PoV, there might still be other charges). This is why when you buy that PI Industries stock for the next 5 years (delivery trade), you don’t pay brokerage for it. Flat brokerage is the idea that each trade costs the same and so larger trades do not cost more. Earlier, brokerages would charge 0.1% of the trade as brokerage. So a 1cr trade would cost Rs 10,000! Now, it costs Rs 20.
  2. Margin funding: When one wants to execute a trade, there is a concept of leverage. If I as a trader bring my capital of 1 lakh rupees, I can ask the brokerage to lend me money (leverage) and use the larger capital to amplify the effects of my trade, making more money. This is known as margin funding for the brokerage. Since the brokerage can square off your positions by the end of the day, this business is very low risk for the brokerage (unlike traditional lenders who can have NPAs). Brokerages charge interest for the margin lending (like any lender does) and that becomes the profit for the broker.

The broking industry revenues are tightly coupled with the performance of the stock market. Every bull run causes greed to explode in the hearts of people causing new client additions to soar through the roof. Bear markets have the opposite effect. Dejected traders and investors realize their shortcomings and end up quitting the market. This makes broking a largely cyclical industry with periods of upswings (bull markets), periods of no growth (sideways movement in the market) and periods of degrowth (bear markets). Have a look at the revenues of motilal oswal financial services over the years:

One can clearly see the 2014-2018 bull market, 2018-2020 bear market and the new bull market.

Due to this cyclicality brokers are eager to diversify into new sources of revenues. The major one which good brokerages are able to build is a distribution platform which enables them to distribute financial products like loans, insurance, mutual funds. ICICI securities gets ~25% revenue from this stream. This is less cyclical than the brkoing biz. There are multiple things to be excited about in this industry, but won’t make 1st post longer by adding everything here.

Just 1 image to excite the reader about the huge under penetration of equity in India and thus the market opportunity. Narrative is similar to under penetration in other industries like mutual funds, equity ownership.

Angel’s Business

Up until 2018-2019 or so, Angel used to be a full broker with many branches, physical order placing and such like. They realized that this model does not scale and also had high operating costs and thus decided to transition to becoming a fully digital broker with no physical presence.

As a broker, angel earns majority of its revenue from broking. The “interest” we see in the chart below is the margin funding book which is also growing nicely.

Broking revenue if further subdivided into F&O, cash segment, commodity segment and currency segments. One would see Cash segment contributions going down due to recent interesting rules by SEBI (Sebi new margin rules: Daily cash turnover plunges 29%; F&O stable) which while ensuring client protection also forced many traders to migrate from cash segment to F&O segment.

Word of caution: margin funding book is very volatile and hence growth trends cannot be extrapolated from 3 quarters. As an example, angel’s margin funding book was 1,000 cr in 2018 peak, and is 1500 cr right now.

Angel also have a couple of products which they are proud of. First is the ARK engine which consists of Alpha-generating algorithms based on multiple fundamental and quantitative factors (i would think of this as a quant smart-beta investing strategy). They also claim that they were the first brokerage to develop such a smart beta algorithmic strategy in-house (difficult to verify for me).

The other product is Angel Bee App (separate from angel broking) which is their take on financial products distribution. As we could see in a previous image, distribution is only 1% of the topline for angel. Angel Bee is supposed to grow this. However, they recently changed strategy. Now planning to develop a superapp through which cross-selling would become easier. Same app would enable users to trade and invest in MF buy insurance etc.

Another interesting trend we see play out across the industry and definitely for angel is that they want to become a tech platform which enables other apps to integrate seamlessly, increasing value added for the clients.

Angel’s Growth

Angel has been consistently gaining market share and scale, which we can see in the images below.

Client Acquisition

Angel’s market share for active NSE clients has grown roughly 1.7x in 2 years.

Angel is adding new clients rapidly. A lot of them are coming from tier 2 and tier 3 cities. Do take a special look at Angel’s share in incremental demat clients which has risen from 6.9% to 17.6%.

Client Activity

A second lever for growth has been the bull market. One can clearly see the large increase in number of trades happening and ADTO (Average daily turnover, a measure of trading volume). Remember, cash segment has been impacted by SEBI rules and thus F&O growth is extraordinary.

Angel’s Profitability

Broking, specially digital business is a very high ROCE business. This is because costs are very minimal (maintain a sub-linearly scaling computer network, employee pack) and client acquisition costs (consists of digital markettting: showing ads on Google and FB or TV. this is the key lever management can control in order to balance between profitability and growth). This is visible in the numbers as well.

The good thing about this industry and business is that there are multiple levers for operating leverage. As they add more clients, the relatively fixed costs get amortized over a larger revenue base leading to not just high but improving unit economics. Second, when management can execute any cross-sell that is at almost 0 cost. So any incremental distribution revenues flow directly to bottomline.

What Excites me about Angel

A lot of what I am going to talk about comes from reading all their concalls and their DRHP. Angel has some triggers lined up which excite me about the business.

  1. AMC entry: In the Q4FY21 concall, they announced their intention of getting into the AMC business in the next 1-2 years. This by itself is a big enough trigger and primary reason for the rerating we have seen recently. What i was more fascinated by was their vision for what this AMC biz would look like. Instead of setting up a traditional AMC, they want to focus on a more tech-enabled and algorithmic kind of AMC. ETFs, Smart-beta products, Quant strategies. They realize that trends which have happened in the west are likely to repeat in India and thus preparing early enables them to stay ahead of the curve.
  2. New CEO hire: The reason I believe that they would be able to do this is their recent CEO hire. Their ex-ceo died (God rest his soul) and they hired the new CEO, Narayan who is an absolute tech giant and is the ex-CTO of ola and ex-head of engineering at Uber. Has worked at Google too (got good feedback internally). His leadership could transform angel from a broking house to a true fintech. While listening to angel concall, it was the first time I heard an indian CEO talk about 4 9s reliability being a top level goal. (the angel broking app has 3 9s reliability and wants to take it up to 4 9s reliability). CEO is also talking about how they want to scale the system to be robust in the face of 10x more traffic.
  3. Angel’s client acquisition strategy: is to reinvest their increased profitability into client acquisition. Instead of letting their profitability increase due to operating leverage, they would reinvest all of that incremental margins into higher client acquisition by doing higher spends on digital ads. This strategy is clearly working which we see in angel’s faster than industry growth. Also, 38-29% of angel’s total client base is active, compared to industry average of 32%. This means they aren’t just acquiring dud customers, the customers are active.
  4. Distribution revenues: are only 1% of the topline. ICICI securities has 25% of topline as distribution revenues. Not that angel would find it easy to scale this up to 25% but management has a clear focus on increasing revenues from cross-selling and distribution of products. All of this is very low cost for the business and this would provide significant operating leverage, flowing directly into the bottomline. Angel’s strategy of maintaining profitability would thus allow them to acquire better (more active) clients and also grow faster than industry.
  5. Industry tailwinds 1: A word on why I am excited about the broking industry as a whole as well. There is severe under penetration of equity in India which makes demat account growth a long term secular trend with short terms cycles (bull/bear markets) in the middle. Although cyclical, if we carefully look at MOSFS revenue graph I has posted, we realize that the revenues do not go down very dramatically in down years (20% down from 2018 peak post 2018). Reason investors lose money is because they buy the company at unreasonable valuations right before a market crash (MOSFS was at 34 pe before 2018 crash. Business went down, valuations crashed and the twin engines of growth became twin engines of degrowth).
  6. Industry Tailwinds 2: In addition broking industry has a mega-trend which has started but not at all played out which is margin funding. Total margin funding book for the Indian brokerage industry is < 1B$ currently See client funding link. This same industry is 100B$ in China and 800B$ in USA. Will the same trend play out in India? I think there is a possibility that it will. Specially with the new SEBI norms on regularising margin funding norms, we should see more structure emerge in this part of the industry.
  7. Angel’s client base: Consensus estimates are for an economic revival in India. This would enable larger tradable incomes for angel’s tier 2/3 clients enabling higher growth for their margin funding business.


This is the most difficult part of the story for me because multiple parts of investment thesis are uncertain. When would AMC be setup? What would its profitability be? When would the next stock market crash happen? For this reason I am refraining from doing any absolute valuation analysis and rather choosing to post a comparison of various peers. Do keep in mind that each company is unique and could have high or low valuations for the right reasons.


This is the most important part of the analysis.

  1. Entire broking industry is cyclical and thus angel is not immune. Any large/prolonged bear market can cause angel’s business metrics to invert from growth to degrowth causing the double engines of value destruction to kick in: derating and business degrowth.
  2. Angel might not get an AMC license. (I personally place low probability on this event).
  3. Angel’s bet on smart-beta and ETFs might be a trend which doesn’t playout in India in which case it would be a bad capital allocation decision.
  4. Angel’s clients mostly and incrementally come from tier 2 and tier 3 cities. Prolonged economic distress either due to covid or otherwise can cause their ability to trade to suffer.

Disc: Invested. Latest position size here.


Q4FY21 concall notes

  1. (Industry growth): Industry witnessed 35% YoY growth in Demat accounts in FY21. Equity penetration at 4% compared to 11% in China and 32% in USA.
  2. Active base grew by 75% on NSE.
  3. Wants to be the first and top retail brokerage. Wants to be a great tech company. Already One of great places to work.
  4. Gross broking revenue 68%. Internet income 15%. Depository income 6%. Income from distribution was 1%.
  5. Of the broking: F&O: 60%, cash: 33% commodity comprised 6%.
  6. 72% direct clients and rest from APIs.
  7. 72% of revenue from new clients.
  8. 49% OPM in Q4
  9. RoE was 34%.
  10. 2-3 year business outlook: Focus is to become leader in stock broking. Like to become platform company. Will take time to set up. Got approval for AMC. Will set up in ½ years and to then for it to come to bottomline will take 1-2 years more. Next 3-5 years most contribution will come from brokerage. Dont see any suppression of margins.
  11. Want to get more market share in MF and insurance distribution business. See big scope in passive and etf and smart beta product. Ark engine is already showing great promise.
  12. We have created AI/ML led acquisition plans. Show ads to google/FB. Dont spend on mass media. More targeted branded activity. Prefer Targetting tier 2 tier 3 customers through google/fb.
  13. In flat we will charge 20rs for cash intraday and f&o. Delivery is free. In old model it used to be %.
  14. Lot of growth has come from tier 2 tier 3. Trend would be similar for upstox and zerodha. It has become easy for them to come online.
  15. Active clients added were half of all additions. Industry wide trend has always been around 35-40% activation for clients/customers. Ours is 38-40% which is high. ADTO dropped but revenue is the same. At scale the topline addition comes to bottomline. Large operating leverage. Overall OPM will maintain at 50%.We are able to break even from new customer in 3-4 months.
  16. 1cr downloads but 40 lakh customers. Where did rest of them go? When we add new functionality then pace at which we acquire new clients will go up. Opportunity to cross sell. Customer can find solutions for which they might not have even downloaded the app. Want to predict what services customer might want.
  17. Want to become largest broker in next 2 years. Want to become a platform and allow people to offer their products.
  18. Journey to become preferred fintech company will become 6-7 years. Distribution income will flow to bottomline. Will try to build SIP business too. Will improve margins.
  19. New app would launch in 1-2 quarters.
  20. Minimum of 35% profit would be distributed as dividend. Quarter 4 becomes the new base for revenue.
  21. CEO on why he selected angel. Vision is transformational. Company knows how to be innovative. Stay ahead of the curve. We are creating a platform. Massive growth in whole sector. Fintech has huge scope. There are pockets of team that are well built. We will need to invest in getting more talent and grooming talent for data science talent. Traffic on angel already hitting planet scale. We will design next gen systems which scale 10x. 14% of opex spent on tech. Opex for new customers are front loaded. OPM should go up as new customers are activated. However, company will spend additional opm to acquire more customers to grow fast.
  22. Will be able to continue with 3 lakh customer acquisition due to tier 2 tier 3 cities.
  23. We have built processes and systems to ensure the system will operate at 99.9% reliability and have low errors and downtime. Renewed focus on reliability of app and systems. Entire app should operate at 99.99% reliability.
  24. 9% yield on the margin funding. Charge clients 18%. Own cash is 900cr on balance sheet.
  25. The market is cyclical. We focus more on being connected to users and understanding their changing needs before the user asks for it.
  26. Dont want to acquire an AMC. We will build the amc the way we want.

PS: I suggest to all investors to download and link PDFs instead of putting links since links stop working after few years.angel-q4-fy21-concall-transcript.pdf (3.2 MB)


Nice writeup @sahil_vi . Got interested in Angel after the Q4 results. Few queries from my side
a. I can see Zerodha is number 1 and Upstox is number 2 and Angel is at number 3 in terms of number of account additions as per the concall if I am not wrong. Is there any datapoint we can get in terms of number account additions per quarter for these 3 or for overall industry?
b. In terms of Uptime Zerodha faces lot of anger from traders and also from order execution. can we get similar reports for Upstox or Angel and will need to see how Angel is performing in this category
c. The 1Cr number you mentioned for downloads is it consolidated for Apple and Android?
d. How much cost they are paying for building the IT infrastructure? Will need to see what architecture they are using. Is it microservice based?

Disc: Have a tracking position. Bought after Q42021 results

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Few major observations from the management interview and articles :

  1. Last quarter majority of growth cam from the small towns (tier 2 and tier 3 ) …around 90 % of the entire growth came from them. Out of this 90 % , 75 % was captured by the digital players ( dont know who isnt digital these days ??). Angel claims to have a market share of 19-20 % here .
    need to dig in the market share of top three players…
  2. Most of the new users use their smart phones for trading and investing now which is aiding the industry, this trend seems sustainable with few player specific caveats… the platform has to be user friendly with excellent customer support…their should be no server outages and service should be seamless.
  3. Angel is assuming stellar secular growth for next few years but if history has taught us anything is that broking industry is cyclical at best. i have observed few cycles and majority of retail only jumps in due to FOMO. Though less options to save might cushion the downside a little here but once the bulls disappear the volumes will follow and so will customer addition.
    4.Management guidance for next drivers of growth :
  4. MF, Insurance and AMC business.
  5. they plan to launch their AMC business in next 2 years (8-9 months for approval and 8-9 months for setting up the business)…any idea why so much time in such digital age …specially with the setting up of the business from a industry insider…will help us to understand the nuances of the AMC business.
  6. They want to disrupt the Active AMC products , need to look at their product offerings and acceptance. A good product will speak for itself in no time. Are their examples from the west which they might try in india…

disc: invested and interested


Under penetration and growth potential is theoretical, and for it to materialize we need GDP growth. Out of 120-150 crore people only 2-5% pay income tax, large % are below poverty line, many are barely meeting ends- forget about saving and investing.

Corona and lockdowns have forced people to look for another income source as they realized their jobs are not as secured as they were thinking. For people sitting at home, watching Netflix and youtubes, youtubers spent lots of money on advertising to attract new people towards markets. Once people start with their regular jobs managing trading and job is not so easy. And I believe sooner or later this corona thing will be gone.

Brokerages like Angel make money when people trade…Not when they invest. To trade people need time, money, skills, luck and even then only 2-5% make profits. Remaining leave markets in frustration. thus there is constant need for adding new clients to earn brokerage.

Markets have been going up consistently after Corona correction and making 20-30% returns has been piece of cake. Other traditional assets like real estate / FDs have underperformed and there is only so much choice for those who want to save/grow. This may continue and thus more and more people might look at Equity as an investment option.

All in all, I think growth will be there for broking business but it may not be as good as we have seen in recent quarters or in coming few quarters. From long term perspective I think its best to invest in broking when there is bear markets around. From short term perspective one can ride the trend till it lasts.


Does Angel declare the size of of their overall book? I mean total clients assets that they have sitting with them across all services?

In the financial cross selling business one of the most important metrics is to see the average client assets, this pretty much tells us how much cross selling and what kind of cross selling is possible. If you see the emerging affluent + HNI segment in urban India most of them have their assets sitting with ICICI Bank, HDFC Bank and other leading private sector banks which are linked to the respective broking subsidiaries. The throughput that a cross sell framework can bring is far higher since the spending potential of the underlying customer base is very high.

Look at it this way - If the average assets/active client is 0.1 Cr (just a theoretical number), cross sell can be very successful. However if the average assets/active client is just 1 lakh, cross sell won’t yield much results even if done well.

My intuitive sense is that all of these new age brokers including zerodha primarily service a customer base that doesn’t have much of a financial net worth to begin with. Other than broking income and maybe selling a product like salary advance loan you can’t do much with them right now.

Experienced investors prioritize balance sheet risks, hence give custody of their assets to a stable entity with a bank backing. Most HNI’s that I personally know don’t have custody of their assets with Zerodha even if they speak highly of them.

Newbie investors prioritize P&L savings since they don’t have much of a balance sheet to begin with. Hence they have accounts with Zerodha, Upstox, Angel,5 paisa etc.

Understanding the customer segment that a business is dealing with should give us a very good indication of what kind of scale up is possible from here. This is a surrogate way of evaluating how cyclical a broking business can be since the dependence on good market conditions is very high.


Sorry, this number is not declared. But I was wondering whether the size of the Margin lending book could help serve as a proxy? With the new SEBI margin lending rules, all brokers are forced to provide same maximum leverage. This must necessarily imply some lower bound on the assets that client is bringing for their trading accounts. The big leap of faith here is that trading account assets serve as a proxy for all assets, on an average, across brokers. This could very well be false. With this assumption, one can compare the margin lending book across brokers.

This data is thankfully declared by NSE on a monthly basis. The margin funding book is volatile and one should ideally take an average across multiple months.
margin funding.xlsx (27.9 KB)
One would actually be surprised to learn that Margin funding per client is higher for Angel, than even Kotak and ICICI bank. On the overall basis, Kotak’s book is 2416 cr, ICICI bank’s is 2014 cr and Angel’s is 1759cr.

Do you have any data to back this claim?

Throughput per client, i agree (because by their very definition, HNI are high net worth). Throughout on an overall basis, this logic would not apply. If Kotak has 1000 HNI who they can cross sell to with say, 1 cr each. And Angel has 1 lakh retail investors with 50k/year each that they want to invest in Mutual funds and 10k worth of yearly premiums that they want to spend for their insurance, we quickly start to see that the volume game can work too. I personally do not find such macro arguments (without data) very useful in my investing because without data they are simply opinions. One would need to look at the precise distribution of number of clients versus net worth for all brokers in order to make any data backed statement. For some value of average affluence, dominating volumes would enable higher cross sell than focussing on the head of the distribution (HNIs). Without the actual data I do not know which side of the argument is factually correct.

Per client basis, completely agreed. But Zerodha and Angel are playing the numbers game. Angel’s stated aim is to become the largest brokerage in India. Whether they can get there, is a different question altogether. One would need to know the distribution of income versus how many people have that income for each of the brokers in order to comment on how much HNIs contribute to the cross sell. Also, as the margin trading data already shows, it might just be a preconceived notion that HNIs invest with banks and people without much of a net worth invest with discount brokers.

There is another problem with using total assets as a proxy for cross sell. If the cross sell has not been much of a focus area for the company yet then the average total must also be necessarily low (because the cross sell specially for MF) has not happened. This is indeed the case for Angel. ICICI and zerodha have been focussing on cross selling. Angel, not so much. Thus, comparing on total assets would present an incorrect picture because one of the competitors in the metaphorical race is running with 1 leg tied.

As an aside to the angel investment discussion, i personally don’t find much merit in the argument that bank backed brokers are safer. Balance sheet is equally safe with all brokers. There might be a perception of risk, but could just be a preconceived notion as far as my understanding goes. The underlying investments are with the depository. The broker is just a UI/UX. I don’t know what the limit for HNI is (whether i am one), but I have 60-70% of my assets with zerodha and intend to keep it that way throughout my life. :slight_smile: UX over everything else, when selecting a broker.

Disc: Invested, biased.


Tough to do a straightforward interpretation of this but some rules hold most of the time -

  1. Delivery based buying rarely needs margin
  2. Majority of the margin based buying is done by a few large players
  3. Higher the revenue from F&O and non cash equity segments, higher will be the margin book

I only have empirical data based on my personal experience of dealing with 100+ HNI families and an equal number of folks in the emerging affluent segment.

In general anyone with a net worth of 5 Cr and above will not take any kind of risk with custody of assets just because a new age broker offers lower brokerage. The thinking there is why risk 10 Cr of assets with a Karvy just to save 10bps on my broking throughput annually?

I remember even during the discount onslaught of Zerodha during 2015-18, none of the UHNI families I was dealing with shifted their assets outside of their traditional custody managers. Some of them still hold assets with old economy companies like SBI, PNB, OBC etc leave alone staying with ICICI and HDFC like banks.

But yes, no data out there for this. I can rely on my personal experience but others can’t. You will have to do your own work to either agree with or refute this view.

We have to rely on inferential reasoning here, see the numbers of ICICI Securities. Within 15 months of launching their own in house PMS they have an AUM of 200 Cr and it is not even a Top 5 priority for the business.

The primary thesis to be tested is if Angel can hold onto all of their recent customers if the market conditions sour and these people stop trading equities. If the average new customer is trading equities for INR 50K and figures out the easy money is done, he might just go off markets. Angel then becomes yet another app on his phone rather than someone who holds custody of his assets. There is no customer lock in at all.

Yes, numbers game it will be for Zerodha and Angel. But if these numbers are prone to falling in the down part of a market cycle, the equation changes. That needs to be evaluated. There is a reason why all of them want to play the advisory/asset management game, their weak link is the lack of annuity and they know it. If the broking business were very reliable they’d never venture into these areas which calls for a different skill set.

In any asset management the maturity of the average customer is very important. Zerodha asset management has a gating threshold of 1 Cr, they do this for a reason. They know that the folks who sign up for smallcase can walk away at the drop of a hat, you cannot build a sustainable annuity business based off selling advisory to a bunch of 25 year old folks in India. Not yet.

This is the new economy way of thinking, but not many of them have big money. Big money lies with senior folks and they think very differently. This trend of choosing a bank backed entity for custody has accelerated post the Karvy fiasco, even within AMC business see the AUM trend of fixed income which has decisively moved towards the larger bank backed AMC’s after the FT fiasco. I have seen more than 10 families shift their 50+ Cr assets to a bank demat from a broker demat after the Karvy fiasco.

Look at an international market like Singapore, it is a custody driven market. A HNI may hire a standalone advisor but custody will be with a DBS or a BNY mellon, never with a new age entity. People who have substantial assets are focused on balance sheet protection and ring fencing their assets, those who don’t have assets spend time on optimizing P&L. A casual observation of customer behavior across these segments should prove/disprove this point.

In terms of building an investment thesis for new age brokers, their vision is to get into advisory, asset management, distribution and cross selling. But their mode of engagement is through an app, which reduces them to a commodity though it reduces their cost. What is an advantage during a bull market can become a liability during a bear market for a new age broker.

Would be very worthwhile to see what Angel did in the previous bad cycle between 2011-14. They have pivoted to the no branch model after 2015 but they had branches before because that was the mode of thinking for all players then. Today even an ICICI Sec is reducing branches but they are hiring relationship managers for key roles. In India the HNI segment is a high touch market where a pure digital approach will take time to be accepted.

Angel’s strength and customer acquisition is based on the broking offering and a very good digital marketing approach. In valuation I’d give 80% weightage to this aspect and only 20% to the other aspects because broking needs to keep firing for the other offerings to pick up pace. The new age customer segment also has low loyalty to an app, they will switch apps and service providers very quickly compared to the older generation. If they don’t have assets with any app and they aren’t trading, why stick around?

Another point (already brought up in this thread) is that there is a limit in India to how many will trade equities. Tax numbers, mutual fund folio numbers all point to the same possibility. Watch the ads of Upstox, it effectively says “even if you are a bum who can’t catch a ball, you can still trade equities”. The new age brokers are already pandering to folks who get into markets for the wrong reasons and this cannot be an encouraging sign.

I just want to highlight a few of the possible negatives here since I deal with money and customers for a living, I have no view yet on whether Angel Broking makes for a good business over the next 4-5 years or not.

Please take this inputs into your valuation exercise and evaluate what the business can/cannot do over the investment time frame. The business is doing interesting things and good things for sure.

Disclosure: Not invested but tracking the overall industry. Also have business interests in the area of money management and asset management


Which reinforces the point that there are HNI traders on Angel. With new SEBI rules, people need to bring their own capital (max margin is limited and same across all brokers). This is generally pledged shares or pledged MF units because bringing fresh capital is simply inefficient. The least one can do is buy liquid MF with the cash then pledge it and trade with the capital. This is why large traders => large investors.

That is correct. The folks that do trading are the only ones that can be easily tracked right now. Buy and hold (delivery) would not even show up in revenues. Someone that only does lump sum infrequently would not even show up in active clients all the time. I wish angel revealed total assets, but my other concern is applicable here. They have not focussed on cross-selling. In fact this is the primary reason they are building their super-app! They want people to download the angel app, and discover on the main app, that they can not just trade or buy stocks but also invest in MF or buy insurance. This cross selling is the key focus of the new app. Without this focus from management side, it is true that many users will download the app and forget about it. This is why it is great for me to see focus on cross-selling in the form of unifying the user experiences across different segments of revenue: distribution and broking. I completely agree that angel would possibly never reach the 25% of topline from distribution that ICICI sec has. However, there is an asymmetric payoff situation here. Upside is unlimited (depending on management execution). Downside is negligible. Because right now distribution is only 1% of topline. Also, this is very low cost cross-sell and hence even if the 1% goes to 5%-10% over 3 years, this flows directly to bottomline and improves margins and ROCE. That is the most likely scenario IMHO. Not factoring in a jump from 1% of topline to 20% in the near-term.

This is fantastic data. The problem is that it is a leap of faith to assume that majority (or even any significant) portion of this comes from HNIs. This could very well have come from HNIs contributing 5% of AUM and retailers (or target segments of zerodha/angel) contributing 95%. In fact if anything, wouldn’t we expect HNIs to be more careful (deploying money managers or financial advisors) with their money and not give it to a new MF?

IMHO they won’t be able to. Downturn would definitely take them down. Even if they got 25% of their revenues from distribution (best case), the 75% of it which is cyclical would go down. The cyclicality cannot be avoided. However, if we look at past data, the reduction in revenue might not be as bad as one might imagine. Have a look at this:

Please have a look at this part of 1st post. In my understanding the biggest risk with broking is not a large fall in revenues, it is buying it at wrong valuations (as is the risk with all cyclicals). If you pay for secular growth when buying a broking business, outcomes can be bad. Are the current valuations good, or bad? Everyone must make up their own minds.

i think new SEBI rules were also implemented post Karvy fiasco to prevent a repeat:

There is a strong assumption here that wealth is concentrated in a few hands. At a broad level, I agree that this is self evident and true. However, I don’t know how to quantify this phenomenon. Most nouveau rich people (not HNIs) I know of (not the 2nd and 3rd tier users, the tech & new age industry employees with 1M+ INR salaries and k+ M INR assets) prefer using zerodha for all their investing, and it is not due to the brokerage. There is definitely an element of social compliance wherein everyone in their acquaintance circle using zerodha makes them use zerodha. It does help that zerodha UX is way better than most out there. This is also the way to differentiate yourself in an industry where most things are commoditized. How much money they have cumulatively, compared to the HNIs, i dont know. But if one can get this data, it would be very interesting to look at. In some sense, this is the torso of the distribution of wealth. The entire discussion is how heavy the head is vs the torso vs the tail.

If indeed the head is very heavy compared to torso and tail, and if it is indeed the case that HNIs prefer bank backed brokerages, then your point is very valid, and cross sell opportunities are limited in the medium term. This statement has 2 assumptions that need some validation before it becomes a self evident truth. What i will do at my end is try and get that total assets number from the management in the next conference call :smiley: Also, any details they can share on the HNIs.

Agreed, this is why the new app, and cross selling becomes important, even if it only contributes 5% to the topline, and not 25% like ICICI sec, to retain the customer.

Thanks a lot, this is definitely very helpful. :slight_smile: helps the investors be aware of the risks and also to ask focussed questions to the management in the upcoming concalls to tease apart the real size of the cross selling opportunity.


Though I think it is difficult to find quantitative data relating to richer folks preferring bank-based brokers, in one of the webinars, founders of Zerodha and Upstox did mention that in India 70% of wealth is with people >50 years in age. This demographic do not trust brands easily specifically in money matters and they do not care about the product nor fees. And so Zerodha in the past has been unsuccessful in trying to onboard this segment of customers because, among this group of people, bank-based brokers enjoy credibility and the discount brokers don’t expect the shift from bank-based to discount brokers to happen in future.

Another interesting point related to the above discussion covered in the webinar was that even in the US, companies like Charles Schwab and TD Ameritrade keep opening new branches even though they have already built online business, just to be able to serve the HNI segment as they prefer a personal touch.

Link to the webinar recording - (Exact time stamp - 53:00 Mins)


Also down to how people got to the platforms. When I first started I had the option of various sub-brokers who my parents knew, and I went with the person who I thought would have my back. They have changed brokers over the years, and the current one now even has an app which I use. Despite that if I make a mistake in placing an order type, or if I forget to transfer or something like that, they will call/text me and sort it out.

In the past they have adviced me on stuff when I could be making an utter blunder (way younger, and major mofo times). So, I don’t mind paying that bit extra to ensure I have a human I trust to interact with. I did explore zerodha, angel etc but not moving.

Recently introduced them to a couple of people and they are happy to have the support and pay for them. Test for all app based stuff in when the bears walk in. Their active bases will reduce and people with draw. And those who suffer massive loses may never come back. (ok, I am speculating here).

Disc: invested in angel.

Regarding your 5th point, they will only start working on it once they get approval. They have already told that they going to come up with new type of products in AMC. Building a product takes time. You can also build it in 2-3 months but if you do not design the product well, issues are going to crop up once it goes into production.

Let me also share my view on broking business. Once the economy starts opening, this growth is not going to sustain for Angel Broking. They have to come up with new products to keep increasing their revenues. Broking will always be a cyclical business and even Zerodha founder has mentioned about the same. Zerodha has come up with products that does automated trading. Angel broking also has to come up with similar exciting products in the future.

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Angel broking to be rebranded as “Angel One” as they now go beyond broking business and try to build a fintech company.



Noticed the Zerodha co-founder making some statements related to a different matter but he had something to share which might be pertinent here.

I see all my family members who are invested in equities and except me no one uses any discount broker but rather a full service bank backed broker. Most of my friends who are active investors too. Personally I have less than 50% of my equities portfolio with Zerodha.

With my limited exposure to private banking but having friends and family in this domain I lean on the side that the big portfolios are of following nature:

  1. Relationships with bankers (and not brokers) who eventually are backed by banks. I have a personal example where to make investments the HNI hired a person to manage his app logins! Asset management by RMs is the way to go for managing substantial corpuses.
  2. Usually never question charges

My viewpoint towards Angel is that they will displace more lower values accounts than these forged UHNI<>Banker/Broker RM relationships. Also might bring in more people to the fold of investing. Another view I hold is that FnO trading over the years will become tougher from a regulation perspective for retail investors. I have seen this play out over 11 years.

My guess is they are going to shine in getting new to beginner younger guys to invest/trade.

I have not done any deep analysis just going through the thread now so please excuse the assumptions.


Disc: No investment in Angel


‘We are just getting started, the market is 10-100x times bigger’ | Narayan Gangadhar, Angel Broking

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All growth metrics have accelerated in May:
Screenshot 2021-06-04 at 9.35.28 AM

A bit worrying to see Company losing marketshare in Cash segment at the cost of gaining market share in F&O. This makes overall revenue stream a bit more risky. For now, the party goes on.

Disc: Invested. Biased.


The 2021 annual report is out.
Angel-Broking-Limited_AR2021.pdf (4.5 MB)

5th Annual General Meeting of Angel Broking Limited is scheduled to be held on Tuesday, 29 June, 2021 at 10.30 a.m. (IST) through Video Conference (VC) / Other Audio Visual Means (OAVM).


I am adding here research report from ICICI direct on Brokerage industry.
Though it is old, it gives lot of information.
Ps: This report is found in google search & hence I assume is public.