Angel Broking IPO. Is it worth to subscribe?

September month is highly valued in the world equity markets due to long saying that “Sell in May and Go Away, and come back on St. Leger’s Day in mid-September. This claims for sell your equities in May and enter back in September. While, this year ‘September’ will be remembered for hasty listings by Indian companies to get their name on the exchanges and achieve listing benefits due to bullish market. Angel broking IPO is the 5th IPO in the month of September following the Happiest Minds, Route Mobile, Computer Age Management Services and Chemcon Speciality Chemicals. The Angel Broking is India’s one of largest and oldest broking house having Rs. 132,540 million in client assets as of June 30, 2020.

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 9,803,921 Equity Shares held by them of ₹10 aggregating up to ₹300.00 Cr. The company has planned to raise fresh capital comprising an aggregate of 9,803,922 shares having ₹10 aggregating up to Rs. 300 Cr at the upper price band of Rs. 306 which will be utilized for meeting working capital requirements while rest will be utilized for other corporate purposes.

Angel Broking IPO Details:

  • Issuer Company: Angel Broking Ltd.
  • Industry: Financial Services
  • IPO Size: 600 cr.
  • Price Band: 305-306
  • Issue Open Date: 22 Sep, 20
  • Issue Close Date: 24 Sep, 20
  • Listing Date: 05 Oct, 20
  • Minimum Lot Size: 49 shares
  • Employee Discount: NA
  • Face Value: 10 RS. Per share
  • Retail Allocation: 35%
  • Listing Exchange: NSE, BSE

About the Company:

India’s one of oldest brokerage house covering customers reach of 96.87% or 18,649 pin codes in India and managing Rs. 132,540 million in client assets as of June 30, 2020. Since its inception in 1996, Angel Broking is a member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE), Metropolitan Stock Exchange of India (MSEI), NCDEX & MCX. Angel Broking Limited (formerly known as Angel Broking Private Limited) is also registered as a Depository Participant with CDSL. The company has enhanced its client engagement after the incorporation of technology to all their services right from the launch of their mobile application for broking services, KYC authentication and complete client on-boarding through the electronic and digital medium in the year 2015 and 2016, respectively. The company has registered more than 4.39 million downloads of Angel Broking mobile application.

Peer Comparison:

There is a flood of competitors in the field of broking industry in India and broking companies go through tough competition. The broking companies in India don’t have any control over pricing structure of the brokerages as they have to go deviate their pricing strategies and business model to compete with the peers. Moreover, the recent shift of investors and traders towards low brokerage firms has dampened their revenues. In the listed space, ICICI securities, Motilal Oswal, IIFL, Edelweiss, Geojit Financial Services and JM Financial have underperformed.

SWOC Analysis:

Strength: Themajor strengths of the company banks upon their footprints in96.87% or 18,649 pin codes in India which describes their capacity of catering clients in all tier cities. The company has a long history in the field of broking since the inception of derivative segment in India. The company has shifted their manual operations to technology-driven machine learning which embarks their ideology of upgradation as per the requirements of the broking industry.

Weakness: The presence of immense competition in the broking industry stands for real weakness of the company. The companies under the broking industry have no control over the pricing of brokerage and other products. Moreover, the emergence of discount brokers has dampened their clientage and revenue structure.

Opportunities:

Equity markets in Indian economy are highly less penetrated in comparison with western countries as people still rely upon channelizing funds in banks for FDs and other deposits. However, people are realizing the potential of investing directly and through other indirect channels, which may cater many clients in the upcoming years. The regulatory body SEBI has opted various measure to inculcate more people in the field of investing through awareness programs and more safety measures.

Threats:

There is no denying the fact that fundamentals and strong background will support the company in turbulent times but ‘Race to Zero’ brokerage, the upcoming culture of the investing and trading universe will baffle their revenue structure. Moreover, the recent Karvy stock broking scam has shifted many investors to brokerage houses which are managed by private sector banks.

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