In its latest research report, brokerage firm Motilal Oswal has reiterated its 'buy' recommendation on Angel One (formerly known as Angel Broking Ltd.) and revised the target price higher to ₹2,000 apiece. This new target price signals an upside of 11.3% from the stock's trading price of ₹1,798 apiece.
The stock, which went public on October 5, 2020, registered a weak debut, opening at ₹275 apiece, which was almost 10.13% lower than the issue price of ₹306. It closed the first day with a 9.8% loss at ₹276.
However, the stock made a remarkable recovery, surging 495% within a year to ₹1,637, and in the following seven months to May, it recorded a new all-time high of ₹2,022 apiece. At current levels, the stock is trading 552% above its listing price.
Angel One is a technology-led financial services company providing broking and advisory services, margin funding, loans against shares, and distribution of third-party financial products to its clients. The company is the largest listed retail stock broking house in India in terms of active clients on the NSE.
Motilal Oswal said that the company is a perfect play on the financialisation of savings and digitisation. Even during the challenging market conditions, the company demonstrated strong operating performance in FY23, the brokerage emphasised.
Unlocking the Potential: India is currently in the initial phase of a multi-decadal trend of financialisation of savings. Over the course of this decade, India is expected to transform into a nation of investors, characterised by the availability of sophisticated financial products, robust capital markets, and a progressive regulatory regime.
The demographic profile of India is predominantly young and more digitally inclined. With an improving literacy rate and growing awareness of financial assets, young investors are increasingly seeking to expand their savings into financial assets rather than physical assets such as real estate, the brokerage highlighted.
As a result, India continues to witness significant expansion in its demat account base, which grew by 25 million in FY23, taking the total number of demat accounts to 114 million as of March 2023, it noted.
Aligning with India's Growth Story: Angel One, in its FY23 annual report, has re-iterated its vision to empower millions of individuals to participate in investing digitally and benefit from India’s growth story, the brokerage said.
As a fintech company, Angel One is at the forefront of revolutionising financial services through the utilisation of data and technology. By harnessing these capabilities, the company enhances accessibility, convenience, and efficiency in its offerings. This not only fuels growth for Angel One but also delivers unparalleled value to clients, it stated.
Super App: The company's Super App is a multifaceted, AI-driven digital platform that offers a diverse range of features. With its top-of-the-line interface, the Super App provides users with an exceptional user experience.
The analytical capabilities of the app will provide several benefits, including personalising journeys for clients, offering the appropriate product to each client, unlocking cross-selling opportunities, and maximising the platform’s potential, the brokerage said.
Digital broking continues to be the game changer: The Indian broking industry is consolidating towards digital brokers, with its market share (NSE active clients) growing to 60% in FY23. According to the brokerage, the technological prowess of digital brokers enables them to provide services to clients at competitive fees and charges.
Strong multi-year revenue visibility from acquired clients: The robustness of Angel One’s fintech model demonstrates a healthy lifetime value to cost of acquisition (LTV:CoA) of 7.8x based on the first three years of aggregate client revenue. As clients increase their engagement on the platform, the LTV:CoA will have a long runway for growth, as per the brokerage.
7 analysts polled by MintGenie on average have a 'strong buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
