Buy this financial action for + 42% increase suggested by Motilal Oswal


Company performance

According to the brokerage, the core 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 its 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 retail sector total. 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?

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 grow 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.

Disclaimer

Disclaimer

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.


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