Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Angel One Ltd (BOM:543235, Financial) reported its highest ever quarterly total gross revenue at INR14.1 billion, registering a 4% quarter-on-quarter growth.
- The company executed over 13 million orders in a single trading session, establishing a new benchmark.
- Angel One Ltd (BOM:543235) achieved a new milestone in mutual fund distribution with over 0.5 million unique SIP registrations in June 2024 alone.
- The company has moved its processes to new data centers and conducted regular disaster recovery drills to enhance reliability and preparedness.
- Angel One Ltd (BOM:543235) continues to invest in technology, product, and data science to improve client experience and deepen market penetration.
Negative Points
- The company's reported consolidated profit after tax from continuing operations declined by 14% quarter-on-quarter to INR2.9 billion.
- Employee benefit expenses, including cost of granting ESOPs, increased by 27% sequentially, impacting overall profitability.
- Operating expenses grew by 15.5% sequentially, partly due to IPL sponsorship and related digital and media advert spend.
- The company deferred dividend payout for the next few quarters to conserve reserves and optimize the balance sheet.
- There are concerns about the potential impact on revenue and margin from recent regulatory guidelines on true-to-label recovery of exchange turnover charges.
Q & A Highlights
Q: Based on the new regulations, including true-to-label charges and changes in pledge allowances, how will these impact Angel One's business, and what levers do you have to offset these impacts?
A: (Dinesh Thakkar, Chairman and Managing Director) We have enough levers to offset the impact of true-to-label charges, including potential pricing changes. Regarding the pledge allowances, we are evaluating the impact and may pass on costs to customers if necessary. We believe our business has sufficient elasticity to manage these changes without significant disruption.
Q: What is the status of the AMC license, and why has there been a delay in obtaining final approval?
A: (Hemen Bhatia, CEO - Asset Management) We are in the final stages of the approval process. The delay is partly due to the election period, which typically slows down regulatory processes. We expect to receive the final approval soon.
Q: Can you provide an update on the launch timelines for credit and fixed income products?
A: (Saurabh Agarwal, CXO - New Business) We are currently in beta for both products. We expect to integrate with more lenders and roll out these products to our entire customer base by the end of this quarter.
Q: What is the strategy for the wealth management business, and why target the UHNI segment given your current customer base?
A: (Shobhit Mathur, Co-founder - Angel One Wealth) We aim to serve all individual needs in the capital market, including emerging HNIs and UHNIs. We are building a comprehensive platform with strong domain expertise and technology to cater to this segment. Our existing customer base is evolving, and we see potential in cross-selling wealth management services.
Q: How do you plan to maintain your EBITDA margins given the regulatory changes and investments in new businesses?
A: (Dinesh Thakkar, Chairman and Managing Director) We are confident in maintaining our EBITDA margins by leveraging various business levers, including potential pricing adjustments. While regulatory changes may impact margins temporarily, we expect to restore them to 47-48% over time.
Q: What is the growth potential for the MTF (Margin Trading Facility) book, and how does it align with your overall strategy?
A: (Devender Kumar, Head - Online Revenue) We see strong growth potential in the MTF segment, driven by innovations and improved customer journeys. Both direct and assisted business segments are contributing to this growth. We expect the MTF book to continue expanding at a healthy rate.
Q: How are you addressing the potential impact of increased lot sizes in F&O trading on your business?
A: (Dinesh Thakkar, Chairman and Managing Director) We believe that changes in lot sizes will not significantly impact our business. Customers have a certain allocation for trading, and they will adapt to new lot sizes. We have enough pricing elasticity to manage any potential impact.
Q: What is the average ticket size of SIPs registered on your platform, and what is your current AUM in mutual funds?
A: (Saurabh Agarwal, CXO - New Business) The average ticket size of new SIPs is around INR 1500. We do not disclose the total AUM, but we are focused on increasing customer engagement and retention through SIPs.
Q: How do you plan to scale up the wealth management division given the younger demographic of your current customer base?
A: (Shobhit Mathur, Co-founder - Angel One Wealth) We are building a comprehensive platform with investment solutions, technology, and relationship managers to cater to HNIs and UHNIs. Our existing customers are evolving, and we see potential in cross-selling wealth management services as they mature.
Q: How do you see the behavior of retail investors during market downturns, and what impact does it have on your business?
A: (Dinesh Thakkar, Chairman and Managing Director) Retail investors have shown resilience during downturns, often buying more shares. The new generation of investors is well-informed and continues to invest in equity, which supports market stability and growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
