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

I recently moved from Axis Direct to Angel One mainly due to the brokerage charges. One of the worst thing they do from a UX perspective is to automatically enable MTF on your account without an opt out option on the platform or during sign up creating a lot of confusion the day you first buy a stock. You start getting mails from them and CDSL asking you to pledge your holdings before 9 PM else they’ll be squared off on T+7.

Also the current app is a pain to use as compared to Zerodha, but a delight when compared to Axis.

IMO this depends on the design and boundaries of the app. If they try to be a PayTM, they’ll probably fail miserably. I’d not compare Angel with VC backed ventures as it has shown an ability to successfully pivot from a traditional broking app to a discount broker and survive and grow with profits sustainably.

Upstox and Groww are yet to reach these profitability and sustainability levels, they’re more like Robinhood right now I’d say.

Also I’ve attended an interview with Angel One last year. As @sahil_vi mentioned, they’re hiring top talent and have a vision for improving their platform(from a tech and a user exp standpoint).

Disclaimer: Invested

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The 5 year CAGR that they have mentioned for different metrics of business performance are significantly off. This is from last year’s annual report. Am I simply calculating it wrong or is there something else?

For example for Total Income to compound at 24.2% for 5 years then income starting from a base of 5461 million rupees would reach 16190 million rupees, but it is 12,990 million which is more like 18%.

Similarly for the other metrics. Are they calculating from the 2015-16 base? Do share any insight that you may have

Angel is planning to keep majority of the workloads in their own datacenters and they have given orders to respective OEMs few months back. As the material is getting delayed due to Semiconductor shortage the workloads may not have the resources to run. They probably delay the launch of Super App in that case. We may get more clarity in the Q4 conf call.

This is my own observation. I may be wrong here from the launch timeline perspective.

Hi Rounak, they have written 5 years but it’s actually 4 years. 2017 to 2021. It comes out to be 24.18%.

To make such a openly glaring mistake in your annual report is kind of a red flag in my opinion.

Can anyone explain how brokers go burst? Its because they provide margin trading facility ? Or any other reasons? Because I read NPA in that is almost nil… as they have underlying shares with them + cash or share security provided by clients. Thn how brokers are getting blown up. There are many small brokers defaulted in last few years but I couldn’t understand the reason behind it. Many thanks

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A black swan event can bankrupt a brokerage if they give leverage to clients without proper Risk Management on their end.

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Mar 22 Shareholding patterns indicates strong hands increasing stake, promoter stake has marginally gone up as well. Broadly Q3 to Q4 Barring Public, rest all increasing stake, FII & DII quite meaningfully , one of larger stakeholder under public category has halved stake from 11 to 5%+, same was well absorbed by institutional players.

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Q4’ revenues at 670 crores and PAT at 205 crores. Close enough :grinning:

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Current Quarter discussion and 2022 - 23 estimations.

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Update: Zerodha at 4.3*. Groww at 4.5*. Upstox at 4.4*. Angel One down to 4.1*

Angel Spark in early access

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Angel One Rating is 4.3 stars.

https://play.google.com/store/apps/details?id=com.msf.angelmobile shows 4.1

On my play Store showing 4.3

recently tried Angel one app. Already using Groww since last years. The UI of groww is much better. But the products of Angel seems much more interesting

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Can you please elaborate on what parts of groww ui you like over angels and what part of angels products you like over groww’s

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A person who is not that smart will have little bit difficulty in Angel one compared to groww. Groww is very easy to use. But hardly has any advanced options. On the other one angel one has so many products. I opened the app for researching the company, and I was thinking of trying out Arq. Arq is really good. Then when you open a stock angel one gives information about technical (with tradingview platform, very good for serious traders, groww too has it’s own tradingview type of thing but still behind t),fundamentals(this is where angel is way ahead of groww) ,about valuation (angel is telling whether a stock is expensive or not by comparing various parameters).

Angel one stock in Groww:



Angel one stock in Angel one:




Just look at the starting screen, fundamentals, groww is very simple, it’s good for new guys who has no idea (had such experience when I recommend groww to my friends they installed groww and were struggling to figure out things, yes such people exist and they will have hard time in angel).
Angel one is also good. But not that simple. But extremely good for people who understand things. Just take a look at the fundamental screen of groww and angel one to see how much angel offers. Fundamental screen of groww is of no ise they don’t even provide ttm pe ratio. surely next time I’ll see the fundamental screen of Angel while analysing a new stock. I’m not into trading so I’ll keep using groww there is no point in keeping multiple accounts. But if I were to choose between angel one and groww when i started investing 2 years back I’d have chosen angel.

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Given Angel fortunes are closely tied with F&O, here are some insights

  1. Pre corona world - F&O was dominated by HIS ( read as Pro category)
  1. What is the actual opportunity size for brokers( investor universe), As we can see, not entire population can invest, below is Zerodha take on opportunity size being around 6 cr.

  1. With zerodha lens, F&O trader universe is only 10 Lacs folks, while this article is from Jan 21, number may not be very different we were to look at from Zerodha point of view - and again this 10-15 lacs universe is extrapolated for full universe.

Here is article - pl,read to get a better grasp.

  1. With hindsight benefit, we can say that article predictions in Jan 21 were not entirely true - as they predicted fall in F&O volumes inline with Sebi margins rule getting stricter - UNLESS there was increase in no of traders- later seem to be the case, F&O volumes haven’t fallen and held steady as well as grew till Date.

  2. Coming back to key ingredient for keeping this F&O engine is - leverage + experience. Now how do each discount broker handles it is something we need to understand with an independent eye.

  3. Let’s look at NSE data - market pulse published each month

https://www.nseindia.com/resources/publications-nse-market-pulse

Some facts per Apr 22 release

Not firmly conclusive but gives direction, feel free to add further insights.

By now we know - F&O drives volume&value( cash and commodity is small part), Index and stock futures + options are major share of F&O pool, per Zerodha article in post- pro traders are small universe ( 10 lac in Jan 21, take ur pick for current nos) which drives majority of trade volumes, retail footprints are decreasing in Futures while steady in options from FY 21 to 22, Pro category dominates per NSE release

Views invited from fellow investors, need to Crack this Pro trader puzzle better. Not a subject matter expert but trying to identify & understand sustainability of true business drivers.

EDIT - Angle performance and a possible thesis

There seem to be two parts of story in Equity/broking theme

  • Part 1 - Engine that is slowing down, small part for Angel - The great retail story - one which is showing signs of plateu/ possible de growth as also echoed by Zerodha founder- this is the story of cash market, though small part for Angel - but more important for traditional brokers.

Here is data from NSE - look at co relationship with market peaking in Oct 21.

  • Part 2 - The real growth engine behind Angel at 80% of equity segment and discount broking industry trend , the F&O space ,

lets look at pre corona - no secular trend or growth

And a massive story with secular trend playing out here Fy21 and FY 22 minor hiccup in Wave 2 and Oct 21 crash but unlike cash segment, growth came back swiftly


IMO As long as F&O story of MoM/QoQ volume growth continues, Angel growth (F&O with 80% of equity segment , and approx near 60% of total revenue per recent Qtr) is well placed, ofcourse mkt share is what Angel need to protect.

Same story is visible in Angel updates as well- look at f&o trend

F&O trend for NSE Can be tracked at
https://www1.nseindia.com/products/content/derivatives/equities/historical_fo_bussinessgrowth.htm

Above data if for NSE only, idea is to differentiate parts of story holding well, still growing ( F&O) and parts which seem to be peaking/slowing down( cash).

Invested

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Zerodha’s Kamath caution call out on cyclicality and future of broking industry, bit intese this time, respectable intent though

Minor promoter selling in Angel as well reported on friday, 40K shares.

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