They have given broad guidance. No specific timelines.
Can someone please provide a point of view on how badly SEBI’s new rules will impact Angel One?
I understand that almost 50% revenue comes from F&O segment, driven by retail audience. I do not have proper understanding of F&O segment, hence want to understand impact of trading volume.
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Key points in SEBI mandate
—> No Daily expiries (One expiry per week/exchange)
—> Contract size to triple
—> Calendar spread margin
First two points would negatively impact the F&O participation from where the major revenue comes from.
This will prove to be a double whammy from brokers stocks. First due to lower EPS, second due to P/E contraction.
Assuming no P/E contraction, since Angel One’s PE is already low, I am a expecting 20-30% correction from here.
References:
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I am surprised and confused by today’s move.
At best stock should have been near zero in the light of a bad and one good news.
About the good news, other brokers like Zerodha have decided not to increase brokerage so increasing brokerage can have a negative impact on cash activity.
At present, 85% of revenue comes from FnO, not sure how much revenue can this increase in brokerage bring.
Any explanations of today’s movement?
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Most probably because the sebi mandates were expected since July or before and has been priced in while angelones price hike news is new and its positive impact is getting factored in .
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Yes, I am also confused. It’s good that I didn’t sell anything.
Angel One has 65% of revenue coming from broking. Out of which, 85% comes from F&O. This means broking has impact on 55% of the revenues.
But, here is what I can deduce from today’s movement.
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There is no overhang on the stock anymore. This is a classic situation of threat being more powerful than execution.
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There is some chance that traders will absorb the changes. My hypothesis is following -
- Lot size increase will impact the option buyers less compared to option sellers. Lets say buyers have money enough to buy 25 unit lot. Let us say now the lot size is increased to 60-65 to meet 15 Lac criteria. The buyers can either bring more money or go for call/put options which are cheaper. (Slightly far away ones)
- The sellers are typically a bit large ticket-size traders. They may absorb the increase in lot size. The traders who have money for one lot only, may switch to buying side.
My take is that the impact can be limited also. There is a chance and we know how addictive F&O trading is. Even after all this, there will be some impact for sure and only time will tell how it pans out.
But I feel retail will lose more after this because of demand supply mismatch. More buyers, less sellers leading to higher option premium. Retailers being forced to buy far away options.
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Impact of New SEBI Rules on Angel One’s Revenue Trend
Revenue Impact:
The new SEBI regulations, particularly those affecting the derivatives segment, have had a noticeable impact on Angel One’s revenue. The company estimates that these regulations could result in a revenue impact of approximately 13-14% of net income from clients related to broking activities. This includes changes such as increased contract sizes for index derivatives and rationalization of weekly index derivative products
.Revenue Trend Changes:
Despite the regulatory challenges, Angel One has continued to show strong financial performance. In Q2 FY25, the company achieved its highest ever quarterly total gross revenue, crossing the ₹15 billion mark for the first time, which represents a 7.5% quarter-on-quarter growth
However, the impact of SEBI’s true-to-label regulations, which extinguished certain transaction income from October 1, 2024, has been mitigated through strategic measures such as introducing brokerage charges on cash delivery orders and imposing interest on non-cash collateral exceeding ₹50,000
.Management’s Mitigation Strategies:
To counteract the revenue loss due to SEBI’s new rules, Angel One has implemented several strategies:
- Tariff Adjustments: The introduction of brokerage charges on cash delivery orders and interest on non-cash collateral aims to offset the revenue impact.
- Focus on Long-term Client Value: The company remains optimistic about long-term client value by enhancing customer retention through diversified product offerings.
- Product Offering Adjustments: Rationalizing interest rates on margin trading facilities to remain competitive and attract more clients.
Overall, while SEBI’s new regulations have posed challenges, Angel One’s proactive measures and strategic initiatives are expected to help sustain growth and mitigate revenue losses in the long term.
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> Angel One Q2 FY25 earnings call highlights
- Regulatory changes like true to label, weekly index derivative product to one per exchange, increased contract sizes for index derivatives and a 2% increase in the ELM on expiry day.(Extreme Loss :This margin is calculated on the notional value of a position to cover any significant market shocks or extreme losses. It is designed to add a layer of protection against market volatility).*
- Will result in the near term softness but the management said they will be no change in the life time value of a customer
- Due to permanent impact of the true-to-label transition charges, angel one implemented several proactive tariff adjustments, including introduction of brokerage on cash delivery orders and the imposition of interest on disproportionate non-cash collateral offered as margin exceeding ₹ 50,000
- This quarter gross broking revenue grew by 2% sequentially, where they did not charge clients during the quarter. be negated we have to look Q3 results to understand how the introducing the brokerage pans out as they are other discount brokers ie,zerodha,dhan,etc offer 0 charge on delivery on equity
- By their rough estimate there will be 13-14% impact from broking related revenues but due to the run rate of 50 – 60% this impact will be negated in less than 2 quarters.
- ASBA in secondary market or UPI block, this is mandatory offering for QSBs from January onwards mgmt says there won’t be much impact
- So, about the loan distribution business angel one charge one time fee for a loan taken by the customer and if same person take another loan then they charge again and angel one is just a distributor so they don’t take NPA in case of default.
- Mgmt guided that EBITA margins still be ~43%
- Mgmt said AMC licence still on final stage and they could get it on any day.
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NSE volumes are down very very significantly. Below is the notional turnover of the exchange for the past 2 days.
The daily turnover in the first week of November looked like this:
The decline in volumes is significant, measuring upwards of a 50% drop. Of course, the upcoming expiry days will soften the blow. However, the preliminary numbers indicate a carnage on the top-line for brokers. The road to recovery appears to be a long one.
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Disclaimer: Not an Angel one investor but an angel one user for one of the family portfolio account.
Dear Members,
Thought to share with you few of unethical practices being followed by Angel One, which I think - if probed by regulator (in letter & spirit) may result in heavy penalty on Angel one or if SEBI follow the path of RBI then may be some business restriction too.
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DP charges being levied by Angel One are per executed sell order basis, whereas depository (CDSL) has mentioned charges per debit (consolidated during a day) due to sell transactions by an investor - For ex: if an investor sell Infosys during a day in 3 different orders - Angel one charges Rs. (3 multiply 20) = 60 + GST - ideally it shall be Rs.(1 multiply 20) = 20 +GST.
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First year AMC is free in AngelOne. But I am surprised to see they have charged AMC in the 12th month itself. For Ex: in our case account was applied on 26 Dec 2023 only, hence, AMC must be applied on or after 26 Dec 2024 only. But they have already applied AMC on 05 Dec 2024. A clear financial & operational fraud.
Think in the short run they are putting best effort to show improved topline / bottom line … But for sure in long term it is going to hurt them hard.
In case any of you is in touch with their investor relations team or intend to join next concall - feel free to seek clarity from management on such issues.
I am sure there will be many more cockroach in the AngelOne way of operations.
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You may want to read their documents, besides it’s broker discretion, until SEBI mandates it
They just need to disclose it upfront,
Which they did
Refer Following(source:DP Charges: Get the Full Breakdown of DP Charges at Angel One)
What are DP charges at Angel One?
Depository Participant (DP) charges are combined charges imposed by CDSL and Angel One on every sell transaction of equity delivery shares. Please note that DP charges are not applicable on intraday trades or delivery buy transactions. The details are as below.
Equity delivery: Rs. 20+GST per sale transaction, split as below.
(Male – INR 3.5 (CDSL) + INR 16.5 (Angel One Charge))
(Female – INR 3.25 (CDSL) + INR 16.75 (Angle One Charge))
For example,
If you sell 100 shares of TCS on Monday at 10 am and again sell 50 shares later in the day, DP charges will be applicable twice. The total DP charges levied in this case will be Rs. 47.2.
As for the second issue, may be you might have missed something, or you can raise the issue to their support team.
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As per Dec-mid week data, the total no of contracts traded has been down 35-40% sequentially from October peak. While no of contracts data is not directly equivalent to no of orders data, but looking at turnover data, it seems like no of orders has also fallen 40% from the October peak. And this is while, full impact of all SEBI F&O restriction will be reflected on Jan’25. The Nov’24 business updates were also bad sequentially (Market share loss in cash segment, 24% decline in orders per day, decline in MTF book)
Still, the stock is up 30% in the last few months, which seems like a liquidity-fueled rally. Remember Motilal came up with an NFO for their Capital Market Index Fund, which might have led to rally in all capital markets fund (BSE has 18% weightage in the fund, Angel One had 7%)
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good observation, timely insights thanks
Thanks Vigneshwar for your inputs.
You are right. it’s broker discretion to charge whatever they think as per their business model. However, DP charges being charged are a sum of what broker charges and what Depository will get as it’s share (if you remember CDSL’s publicly declared Rs. 3.5 is post SEBI mandate only which was issued couple of months back).
Now, in my observation, CDSL only get Rs. 3.5 + GST for consolidated trades (per stock) at the end of day (same has been verified in Zerodha too Zerodha brokerage charges, fees & taxes on trading and investing)
DP (Depository participant) charges
₹15.34 per scrip (₹3.5 CDSL fee + ₹9.5 Zerodha fee + ₹2.34 GST) is charged on the trading account ledger when stocks are sold, irrespective of quantity.
I am sure, Zerodha can’t afford to give subsidy, if CDSL would have mandated that DP charges must be charged on per executed order basis and not the consolidated basis.
And in case Angel One is charging by mentioning that a part is meant for CDSL, than it is clear case of financial misconduct.
Account applied date is there, charges debit date is there, First year free AMC is documented Brokerage Charges, Transaction & Govt. Charges | Angel One Pricing
Hardly any scope of missing / misrepresenting fact 
Disc: No intention to discourage Angel One investors, only intention was to bring unfair practices of Angel One which could lead some penal action on them. I have escalated the matter to SEBI after no corrective action from Angel One. Also initiated the process to close account in Angel One.
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DP changes are clearly stated that it is a combination of CDSL charges( one time per day) and angel one (at their discretion , charged as per order basis)
there was a gap of 20 odd days, may it their internal policy, or some sort of quarterly automated cycle, though its not fulfilment of their service, its unwarranted to call it “clear financial & operational fraud”, you could have shared us the angel one support interaction you had with them highlighting this and their response that would have been more relevant to asses their integrity at ground level
Its always good thing to have opposing view especially on the investment side, however calling the operational negligence or practises as outright financial fraud is harsh in my opinion
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Angle One -
Nov Business Updates, Q2 results and Concall highlights -
Nov 24 business updates -
No of clients @ 2.87 cr, up 56 pc YoY, up 2 pc MoM
Gross client acquired @ 6 lakh, down 11 pc YoY, down 14 pc MoM
Avg client funding book @ 3965 cr, up 113 pc YoY, down 4 pc MoM
Avg daily orders @ 72.8 lakh, up 36 pc YoY, down 6 pc MoM
Avg daily turnover @ 42.6 lakh cr, up 24 pc YoY, down 12 pc MoM
Retail F&O mkt share @ 21.9 pc vs 18.3 pc YoY vs 21.9 pc MoM
Retail cash mkt share @ 16.4 pc vs 15.2 pc YoY vs 16.7 pc MoM
Unique SIPs registered @ 6.5 lakh, up 130 pc YoY, down 12 pc MoM
MoM drops seen above are due to kicking in of new SEBI regulations wef mid Nov wrt One Index expiry per exchange per week and substantial increase in contract sizes for index derivatives
Proactive tariff adjustments initiated by the company wef 01 Nov 24 -
Cash delivery - Rs 20 / order ( earlier, delivery trades carried zero brokerage )
AMC charges - Rs 60 / Qtr from 2nd yr onwards
Interest on MTF - 14.99 pc chargeable fortnightly ( vs 18 pc previously )
Q2 Financial outcomes -
Revenues - 1516 vs 1049 cr, up 44 pc
EBDTA - 597 vs 418 cr, up 43 pc (margins @ 50 vs 51 pc)
PAT - 423 vs 304 cr, up 39 pc
Breakup of revenues -
Broking income - 936 vs 727 cr
Interest income - 359 vs 181 cr
Others ( Depository, Distribution, other income ) - 221 vs 141 cr
Angel One’s mkt share in NSE active client base @ 15.4 pc vs 11.2 pc in Sep 23 - has seen steady gains for last 8 Qtrs. Company is ranked no 2 in incremental NSE client additions
In Q2, Angel One went live with distribution of credit products on its platform. Launched unsecured personal loans in partnership with 3 NBFCs with a plan to on-board more partners. Disbursed loans worth 360 cr in Q2. Company is using their advanced data analytics capabilities to evaluate customers credit profile before sanctioning loans
Company also started distribution of fixed deposits via its app. Have tied up with 6 partners including banks, NBFCs for the same
In Q2, company added 23 lakh unique SIP registrations
Company received license to commence their AMC business from SEBI on 26 Nov
In Q2, company added 30 lakh new clients, 90 pc of which were added from Tier -2,3,4 cities / towns
Total interest earned on MTF book + interest earned on deposits with exchanges stood @ 359 cr in Q2 - representing 24 pc of gross revenues
The ancillary income linked to value of orders executed by clients stood at 110 cr in Q2. This income shall be extinguished wef 01 Oct as per the new ’ true to label ’ guidelines issued by SEBI
Employees cost increased by 15 pc in Q2 to 230 cr on account of new talent hirings for their wealth management business
Adjusted for the IPL sponsorship costs ( incurred in Q1 ), operating expenses still fell by 2 pc QoQ despite 16 pc higher gross client acquisition by the company in Q2 vs Q1
When the new regulations kick in ( wef Mid Nov 24 ), company expects a hit of 13-14 pc on their overall broking revenues ( a decline in the F&O segment due fall in volumes + an increase in cash segment as the company starts charging Rs 20 / order in the cash segment )
Company has migrated its clients from their broking App to their new super App. Company is bullish on their distribution business ( distributing loans + insurance + FDs etc ). They ll give out more details about these businesses as they mature. Company expects these new business verticals to start breaking even in about 18 months time
WRT their AMC business, that may take 2.5 - 3 yrs to break even
When company distributes a loan, they get a one time fee. The risk is carried by the Bank / NBFC. Angel one is just the distributor
The impact of incubating the AMC business is aprox 2 pc of revenues. So if the company was not incubating this business ( by hiring talent etc ), their operating margins would have been higher by about 2 pc
Company believes that the new SEBI circular to curb / reduce F&O activity in the market should turn out to be extremely positive in long run for their business. As customers lose less money in F&O, the life time value of the customers increases as they are more likely to be profitable and more likely to buy MFs, FDs, loans, Insurance etc from the company
Company’s ADTO from cash mkt was @ Rs 7100 cr in Nov 24. Assuming 60 trading days per Qtr, total Qtly turnover would be around 4.2 lakh cr. Assuming avg order size of Rs 1 lakh per order, total no of orders should be around 4.2 cr orders. At Rs 20 / order, company should earn about 84 cr / Qtr from their cash segment. However, if the avg order size is say 50k, the no of orders would double and company may end up earning about 168 cr / Qtr ( this is just an extremely rough, back of the envelop calculation, to be taken with a bucket of salt )
Company believes, they still have a lot of elasticity when it comes to increasing their charges per transaction for both derivatives and equity segments. If necessary, company may exercise this option further
Disc: initiated a small tracking position, closely monitoring company’s progress and the impact of new SEBI regulations, not SEBI registered, biased
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- Angel One replied (screenshot below) to my complaint in 4 working days when they claim to respond within 24-48 hours.
- They agreeing on the fact that AMC is charged only after completion of one year
- However, for reversal of charges - they putting a funny condition. Unbelievable - in a way they are restricting my rights to even complaint.
- On top of that, they mentioned - “were unable to reach you” - also “you have agreed to withdraw all and any complaint filed”. How is it possible that both these statements can be true at once
Trust members at VP forum are intelligent enough to understand what is right / wrong in this.
Wondering, if they can short-change customers, will they think twice to short-change investors who believe only on reported numbers.
Disc: Thought many times before posting above screenshot, but I was asked to share it to assess the integrity of Angel One, hence, it is shared. No more spamming from me on this. Thanks.
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