According to the brokerage, the heart of Angel’s growth strategy has been its customer acquisition initiatives in which it has targeted the Millennial and Gen Z population in Tier 2 and Tier 3 cities. , the share of level 2 and level 3 cities in their gross customer additions rose from 85% in 1QFY20 to 94% in 2QFY22. In addition, the median age of these clients decreased from 34 years in 1QFY20 to 29 years in 2QFY22.
The brokerage said Angel’s market share in F&O increased from 3.3% in 1QFY20 to 21.1% in 2QFY22. While the cash segment came under some pressure after the implementation of margin standards (market share increased from 18.2% at 3TFY21 to 13.6% at 2TFY22), the M&O segment contributes 98% of the total for the retail sector. ADTO has seen a steady increase.
The brokerage reported that “Angel’s market share in the F&O ADTO segment has increased sharply from 3.3% in 1QFY20 to 23.8% in 1QFY22. During 2QFY22, his market share is fell to 21.1%, and the company is confident to recoup much of the lost market share in due course. In the cash segment, the company’s market share increased from 13.7% to 1QFY20 at 18.4% in 2QFY21 before falling to 13.6% in 2QFY22.
What Should Investors Do?
Motilal Oswal reported in his research report that “During 1HFY22 Angel reported income of INR10b compared to INR7.2b in FY20. We estimate the company will register a CAGR of 34% for FY21-24E. The margin EBITDA is expected to remain stable at around 50% as the company has shifted towards sustained investments in technology and marketing, with a focus on acquiring more customers and improving its activation rates. “
The brokerage further claimed that over the next three years, we expect Angel’s revenue to increase to 34% of CAGR and the P / I ratio to remain stable at 51%. As a result, the company is expected to provide a CAGR of 38% PAT to INR7. 8b during fiscal year 24E. Angel’s business is largely small-cap, and all of its income is based on cash flow (not operating income).
The brokerage says the stock is trading at a P / E FY24E of 13.1x, which we find attractive given the company’s strong earnings growth profile. Angel’s RoE is expected to remain healthy in the 34-42% range over the next three years.
The above stock was selected in the Motilal Oswal brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.