Angel Broking

IPO Size

`600 Cr

Price Band

`305-306 Per Share

Minimum Lot Size

49 Share

Face Value

`10 Per Share

Employee Discount

NA

Retail Allocation

35%

Issue Open Date

22 Sep 20

Issue Close Date

24 Sep 20

Listing Date

05 Oct 20

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 the Angel Broking mobile application.

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases - 53.49 - 6.78 - 6.78
Material civil cases - 129.66 - - - -
Taxation matters - 250.2 - - - -
Regulatory Procedings - 79.49 - - - -
Amt. (In Million Rs.) - 512.84 - - - 6.78

Financial Statements:

Particulars (in cr.) FY17 FY18 FY19 FY20
Revenue 471.4 738.5 737 710.5
Total Income 488.6 753.7 762.6 742.8
PAT 37.9 101.1 76.7 86.6
EPS 26.4 14.04 10.65 12.03
Book Value 217.6 62.4 70 79
EBITDA Margin (%) 18.7 32.5 24.1 21.6
ROE (%) 12.1 22.5 15.2 15.2
P/E (x) 11.6 21.8 20.7 25.4
P/BV (x) 1.4 4.9 4.4 3.7

Recommendation

As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe with Caution’. The brokerage firm IPO seems rosy as the recent additions in demat openings this year due to Work From Home(WFH) alternative has posted a rising trend in the brokerage revenues but the default of Karvy Broking house has spooked the investors. So investment in broking business seems a bit risky. Moreover, the peers of the company in the listed space have not performed well ever. Therefore, the dusky history of the complete sector doesn't make it a healthy investment to bank upon. The Angel broking IPO is demanding 25.40 P/E multiple (considering the FY20 earnings), a little lower than the industry P/E of 29.80 times, which is the only reason to subscribe.

Promoter of the Company

The promoters of the company are Dinesh D. Thakkar, Ashok D. Thakkar and Sunita A. Magnani

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.

Objectives of the Issue

Offer for Sale

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. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 9,803,921 Equity Shares of ₹10 aggregating up to ₹300.00 Cr.

Fresh Issue

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. The net proceeds will be utilized for taking care of working capital requirements while rest will be utilized for other corporate purposes.