Angel Broking IPO Review – Valuation, Pricing & SWOT Analysis - YouTube

Namaskar, my name is Mukul and you are most welcome in Asset Yogi.

Friends, now a lot of companies are launching their IPOs in the month of September.

2 IPOs just opened on 21st September i.e. on Monday.

That is, the day we are shooting the video,

both have got good responses too.

Camcom has got an even better response, the entire issue has been subscribed within 2 hours.

And while I'm shooting this video, Cams IPO has got subscribed at about 65%.

Now tomorrow i.e. on 22nd September another IPO is coming.

That is, the IPO of Angel Broking which we are going to talk about in this video.

Will do complete detailed analysis,

understand the company and its business,

who are the promoters, how is the shareholding pattern, how is the financials?

After what is the valuation is being calculated,

then we will also see competitor analysis.

Will do SWOT analysis i.e. will understand Strengths, Weaknesses, Opportunities and Threats.

Will see all the details of the IPO and conclude it.

so stay tuned in this video.

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Friends, the easiest way to apply for IPO is through Demat account.

Because it goes online and we can pay through UPI.

And how to apply, I have made a detailed video for this, you can watch it.

And we have done a detailed video on how to open a Demat account.

You will also find the link to open Demat account in the description below.

Along with this, if we want to increase our allotment probability in IPO,

then we can also apply through multiple accounts.

you can apply through the accounts of your family members or friends.

And it takes a little time to open a Demat account,

so you will be able to easily apply for the upcoming IPOs.

That's why you must open a Demat account.

Let's talk about the company and its business first.

you can guess through the name itself that Angel Broking basically a Stock broking company.

Which is its primary business.

then it is a financial services company.

We also see the rest of the financial services that it provides.

So this is basically the 4th largest stockbroker in terms of active clients

i.e. those who trade regularly or invest in the stock market,

we call them active clients,

according to that, they are the 4th largest stockbroker.

What are the businesses, stock broking is a simple business, we know this

Along with this, these people also give advisory, it is a full service broker.

they also provides Margin Funding,

Distribution of Financial Products and also provides Loans against Shares.

Now let us understand all these businesses in a little more detail.

If we talk about Stock Broking than they mainly focus on their 3 products.

They are paying a lot of attention to Client acquisition, these days

they have increase a lot of DIgital Outreach.

And they are paying a lot of attention to their apps and other products.

Basically what kind of stock broking is there?

these are Equity products, there is cash delivery in equity.

That is when you buy your shares and take delivery of them.

So that means if we buy the shares for investment, then we will call it cash delivery.

Then many people trade in Intraday, they get brokerage in it.

Many people trade in futures and options and they get brokerage from them.

People trade in Commodities and trade in Currency.

and people trade and invest in Debt products too.

So they get brokerage from all these places.

Along with this, you can also invest in IPOs through Angel Broking.

And Angel Broking is a member of all stock exchanges,

of all major stock exchanges BSE, NSE, MSEI, MCX, NCDEX.

and it also provide Research Services.

So many discount brokers we will talk about right now

when we see analysis on competitors.

Not many Discount Brokers offer this Research Services.

But Angel Broking provides research services too.

Along with these they also provide Investment Advisories.

One of their products is ARQ, where they give rule based advisory.

After this they provide Margin Funding.

Margin Trading Facility and Non-Margin Trading Facility for Client Lending.

Also, keeps the securities as collateral i.e. when there are shares,

in your account, accordingly you get margin.

then they do Distribution of financial products, also sells Mutual funds,

then they get some commission from that.

Apart from this, they also sell Health and Life Insurance,

they sell both offline and online, their online product is Angel BEE.

They also give loan against shares,

this is their own NBFC, which they have registered as AFPL.

I'll remove this extra L here,

AFPL is their subsidiary, so it also gives loan against shares.

So this is their primary business.

Now we understand what is their market share?

As we talked about earlier, their main business is stockbroking business.

almost 75% revenue comes from stockbroking.

So their market share is about 6.3% in terms of stock broking.

they have 2.15 million Demat accounts, as on June 2020.

And if we talk about the number of accounts, then within the last 2 years,

they have opened a lot of accounts,

then in March 2018 their total was 1.06 million,

which is now 2.15 million in June 2020.

So their growth was very strong in the last 2 years.

Now here we talk about some other numbers.

Angel Broking App has around 4.39 Million plus downloads.

Angel BEE has 1 million plus downloads.

Nationally it is very present when it comes to customer outreach

because, they have many authorized partners.

Increased Focus on Digital Products and Outreach.

Recently they have started paying much more to Digital Outreach.

Onboarding is being done of all the customers through digital medium.

And they have opened the second highest number of accounts in the last one quarter year

i.e. which was the quarter half of the financial year 2021.

So everyone knows the news that Demat accounts were open a lot

during last time when there was lockdown,

during that time many people were at home, so the trading activity also increased a lot

So, the second-highest number of accounts were opened by Angel broking.

Now if we understand its history and a little shareholding pattern,

then this company was incorporated in Mumbai in 1996.

Thakkar's are their main promoters

and here now we will see these 3 main promoters are Ashok D Thakkar, Dinesh D Thakkar and Sunita A Magnani.

And their family group comes under the promoter group,

if you see the total share of the promoter group, then it becomes 28-29% here.

It's 6.42% here

then they have about 55% shares and the remaining 45% shares

are with the rest of the public and individuals.

And the number we are seeing here

is actually Red herring prospectors they submitted in 2018 SEBI.

I have removed this number from there,

there might be few changes that are not reflected in this.

Now let's talk about Financials.

paying a little attention to the financials

This is the financials of 2018-19-20,

if we talk about the revenue, then see this revenue was around 780 here and 784 crores here

So there is no significant increase only 0.53% in 2019.

After that a little revenue decline here it is -3.75%.

So it's a little bit of a concern area that revenue is declining.

If we talk about Net profit, see here it was about 108 crores in 2018.

And then it came down to 80 crores.

So this is the concern area too,

after that, the Net profit is increased a bit here to 82 crores.

So it's basically a little concern area.

But if we talk about June 2020, then within a quarter,

they have got very good numbers.

So, we don't know what would be the result in the future.

So we can't make a complete pattern according to the quarter.

Because the trading activity was increased a lot during this quarter in lockdown.

Many Demat accounts were opened by all the brokers.

So that is why we do not consider it as a pattern, we will consider it as an exception.

Second, if we look at their Profit Margins.

So earlier in 2018 it was about 14 percent,

then it became 10 percent again,

then it was 11 percent.

So here it is a little less if we are talking about profit percentage margin.

And here if we talk about one quarter, it becomes 19 percent.

but again it's an exception.

We'll have to see how it turns out throughout the year.

Talking about return on equity i.e. talking about return and Net worth,

it was also high earlier and after that it is decreasing.

We will neglect this one quarter.

So if you consider the average return on equity, then it comes around 15-16 percent.

75% of the revenue that we talked about earlier comes from broking.

So, on this basis, we will further analyze it.

Look at the valuation that if we talk about the price being quoted

as of today's date of 305 or ₹ 306.

Accordingly, if we do a valuation of 306 on the upper band.

And take the Earning of the financial year 2020

which we have talked about now, we are ignoring this one quarter.

So we are assuming the earnings of March 2020.

Accordingly, its price earning ratio becomes 26.75.

If we take only one quarter of FY21 and annualised it

That is, we multiply it by four times, assuming that this will be the same

in every quarter in the financial 20 years.

So, accordingly, it's P/E is 11.6.

So, it's a big difference.

One quarter's performance is pretty good, we can definitely say that.

How much is the P/E of the industry,

the industry's P/E very good, here it is 29.80.

Now who comes in the P/E of the industry, ICICI

Security, then 5 paisa which are already listed companies.

Or India Infoline, if we look at average P/E of such companies

So it is 29.80.

So if we look at the Price to Book value, then as of June 2020, it is 3.45.

If we look at the industry, it becomes 13.02.

So if we compare with industry, the price seems fair.

But from what I talked to you, the only concern is that

the performance of the quarter is good that this will keep on repeating,

we will know only in the coming time.

After that, if we analyze the Competitors,

how the industry has changed in a little while?

So look here if you will see the charges,

So all of this you'll see what you're looking at above all these are discount brokers.

You can see it here.

Now Angel Broking has entered into Discount Broking.

The pioneer in this was Zerodha, so you can see here

Now see here that the charges are zero in delivery, even in Angel, also in Zerodha,

RKSV securities is Upstox there is also zero.

And in Intraday it charges flat fee of ₹ 20 so all these charges are almost same.

And the other traditional brokers, bank based brokers,

Axis, Kotak or HDFC or ICICI these people still charge on as percentage basis.

So, In the last 4-5 years, this broking industry has evolved a lot.

here, in deliver especially the discount broker do not charge delivery.

And due to the flat fee being charged, there has been a lot of pressure on margins.

Industry has become very competitive.

And technology has become very important.

now, if we see further analysis of Competitors

See who has added clients in the last quarter.

Here, Zerodha is in first place, 27% of the accounts have been added by Zerodha.

Angel Broking has given a decent performance here

which has added 25% of the accounts in it.

Then 5 paisa and Upstox and so on.

After this, it becomes very less by 10 percent.

So 20% and above, most of the accounts are opened in all discount brokers in the last quarter.

After this, if we talk about a little longer time,

then you can see the performance of the financial year 2015 to 2020.

Angel Broking's growth has also been significant.

within the total number of accounts that we talked about earlier.

It is coming at number four and as of June 2020 you can see

these are the numbers.

so pay attention here we are talking about the active account.

Zerodha has about 2 million accounts.

1.1 million of ICICI Securities.

Upstox have close to less than 1 million.

And Angel Broking and Upstox is pretty close.

And one more thing we also pay attention to

that the active clients here.

It's basically 12 million clients.

So, in India only 1.2 crore people that is

This is the number of June, so let's assume 1.25 crores till September.

So basically equities i.e. how many people invest actively under direct shares 1.25 crores.

So the population of India is one hundred and fifty crores.

So basically only 1 percent of people invest in shares.

Now, we will also see the Margins

that what is the percentage of broking income?

what percentage of the overall revenue comes from broking?

So, see that in the financial year 2020, 75% of Angel Broking's revenue has come from broking.

And you can see that you can compare all the other companies like this,

especially all the listed companies.

Another thing to see is the Profit after Aax margin.

That is, PAT margin.

If you see that here, it is in the range of 10-11 percent.

And if you study other brokers then their margins are much better.

So. this is a small area of ​​concern for us.

Now let's talk about SWOT analysis.

First of all let's talk about Strengths.

So, it comes in Top Retail Brokerage.

A brand name has been created is an old company.

After this, they started focusing heavily on technology and digital outreach.

they have Diverse products offering

because at the same time they provide research and advisory,

they also provide mutual funds and also provide insurance.

And also giving a lot of competitive offerings

i.e. they keep their pricing within a cutthroat competition.

So you must have seen that now it is also completing with discount brokers.

Along with that, their management is also very experienced

because these people are in the broking industry from the beginning.

If we talk about a Weaknesses,

then, we saw one concern area is their decline in revenue growth.

Revenue has come down a bit in the last 3 years.

And we will consider one quarter as an exception.

Have had low profit margins in the last 3 years

so this also becomes a bit area of ​​concern.

Talking about Opportunity,

There are two huge opportunities here,

Equity Penetration is very less in India

just now we have seen how many active accounts are there,

I assume approximately 1% or a little more than 1%.

But if we talk about the developed countries,

then more than 50% of the people have exposure in equity.

And if we also mix mutual funds here, then in equity mutual funds

only 4-5 % of people invest here.

So, here Equity penetration is not more than 5%.

Basically the gap is huge between 5% and 50%.

And the population of India is also very high.

Along with this, the people of India are practicing digitalization on a huge scale.

So such a company can be of great benefit to it who will focus on technology.

And broking industries have become very technology focused.

So, this was about Opportunities.

Now let us see Threats, that what are the threats for this company.

First of all, the competition has increased a lot within the broking industry.

There is a lot of cutthroat competition

and there is a lot of pressure on the margins.

Now it's basically a volume game, especially because of discount brokers.

Broking business in now a Technology Play.

Whoever have strong technology, strong server,

High frequency trading takes place in today's date algorithmic trading takes place

If the servers are down, then in today's date people do not feel relaxed.

So technology must be strong enough in this industry.

So it could be a threat if it doesn't ramp up the technology properly.

But they have started focusing on technology.

The third threat could be within the distribution business.

Because Direct Mutual Funds have come a lot in Mutual Funds nowadays.

People have also started going towards them,

so it may happen that there will be pressure on the commissions, from there the commissions will be reduced.

Along with that, they also distribute insurance.

So nowadays there are many online players in insurance too.

such as Policy Bazzar or Coverfox.

So, they may face competition there too.

After this, there is a short-term threat of Covid-19.

There was a lot of trading activity during the lockdown,

A lot of Demat accounts were opened.

But in the coming times, if there is pressure in the economy

if the disease continues,

So people's savings can also have a short term effect,

And it will also affect Equity market.

Because equities are basically a little risky asset class.

If people do not have much money there will be no disposable income

So they might not invest money in the equity market much

So in the short term, Covid-19 is also a threat.

After this, if we talk about the details of IPO,

then the price of IPO is up to rupees 305-306.

upper band is of 306.

So as retail investor if we want to increase our probability.

If we want to apply in this issue and we want to get allotment.

So we should apply only on upper band i.e. on 306.

this is a Book built issue.

I have made a detailed video on what is book building issue you can watch it

The size of the issue is Rs 600 crore.

600 crore rupees will be raised from the market

and let's understand where this money will be used?

Fresh Issue is worth 300 crores.

That is, 300 crores will come to the company,

which they will use as their investment or will use as working capital.

The offer for sale is 300 crores i.e. there are some existing investors

and promoters who are also taking exit.

That is, 300 crores will be taken out by them.

Here are these people who are old promoters and investors

who will walk out with this 300 crores.

After that, talking about the lot size, the minimum lot size is 49 shares.

That is your minimum investment is of 1 Lot in IPO.

we've talked about this many times.

So your minimum investment according to 306

If you multiply by 49 years, it becomes 14,994 rupees.

You can invest maximum for 13 Lots.

13 lots are the maximum allotments you can get

it becomes 1,94,922 rupees.

Object of the Fresh Issue,

Where will this money be used, i.e. the money which comes to the company,

it will be used in the working capital requirement.

Or will use for general corporate purposes.

If we talk about the timeline, then the offer is opening on 22 September 2020.

will be closed on 24th September 2020,

the allotment will be done on 29th September.

Refunds will be initiated to those who are not allotted if the lottery system

let's say if the subscription is too much

then the Refund will be initialized by 30th September.

Equity shares will be credited to your Demat account by 1st October

And its listing will be done on October 5.

And this issue is getting listed on both BSE and NSE.

If you talk about conclusion, then the numbers of the last quarter are very good in the company.

a lot accounts were opened.

Revenue and profit numbers have also come up quite well. as we just saw

But, is it going to repeat in the coming time?

Whether this performance will repeat in the next quarter will be a matter to be seen.

Today we can treat it like an exception.

I hope you must have got clarity after watching this video.

We have tried to do complete analysis.

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May be those people are also interested in Angel Broking's IPO.

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