Angel One- CEO Resignation A Negative Surprise; Business Momentum, Low Valuations A Positive: ICICI Securities

ICICI Securities Report

We remain optimistic on Angel One Ltd. on the basis of its continuous business momentum and the currently low valuations (stock trading at 10 times FY24E price/earnings).

The possible regulatory threat on earnings from proposed blocking of funds, which can impact the float income of brokers, and any impact from the resignation of Chief Executive Officer Narayan Gangadhar, are well captured in our new valuation multiple of 12 times compared to the earlier 18 times.

Our earnings estimates of Rs 9.5 billion / Rs 10.3 billion for FY24E / FY25E also factor-in possible margin compression due to higher investments.

Key risks:

• Possible impact on business momentum on account of exit of CEO Mr. Narayan Gangadhar and regulatory headwinds are key risks.

• Regulatory risks could come from possible impact on float income on account of proposed blocking of funds for trading in secondary markets and any targeted action to curb the rising derivatives volumes on the exchanges (NSE average daily derivative volume compound annual growth rate has been 116% over last three years).

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