Angel Broking Ltd. IPO Review

Angel Broking Ltd. IPO

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Angel Broking is one of the oldest and largest retail broking houses in India. The company was incorporated in 1996, and it has since established itself as a renowned digital broking and financial services platform, with a pan-India presence. As of June 2020, the company has become the largest independent full-service broking company in the country in terms of the number of active clients in NSE. They also have a market share of around 6.3% as of June 2020.

Angel Broking provides broking, margin funding, advisory services, financial services, and loan through shares through Angel Broking and Angel BEE brands, powered by ARQ. The company has been able to cover almost the entire country and manages more than INR 13,000 crore worth of assets in more than 2.15 million operational accounts.

The retail broking firm has a strong brand presence using a targeted strategy of offering services under different brands to cater to a diverse group of clients. The company is well placed to capitalize on the expected growth in the Indian broking sector due to its strong digital and physical presence, competitive pricing, and early mover advantage in providing broking and financial services through online and offline channels.


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The company offers its broking services through

  • Online and Digital platforms
  • A network of over 11,000 authorized persons

The company has been able to cover almost the entire country and manages more than INR 13,000 crore worth of assets in more than 2.15 million operational accounts as of June 2020.

IPO Announcement

Now, the company is aiming to raise additional capital of INR 600 crore through Initial Public Offering (IPO). The Angel Broking Ltd. IPO would include a fresh issue of INR 300 crore and an offer for Sale of INR 300 crore worth shares by investors and promoters.

The company has filed Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). With the IPO announcement, Angel Broking would add another feather in their cap.

Details of the IPO

Here are the important details of the Angel Broking IPO

Issue Date

The issue will be available from 22 September to 24 September 2020.

Face value of the Shares

The face value of the shares of Angel Broking is INR 10 per equity share. 

Issue Size

The total size of the upcoming IPO is INR 600 crore out of which INR 300 crore is allotted for a fresh issue with 98,03,921 number of shares.

While, the remaining INR 300 crore is available as an Offer for Sale (OFS), a component through which the promoters of the company would offload their existing shares. Under the OFS route, around 98,03,921 equity shares of the company are likely to be sold.

The Price Band

The Angel Broking IPO issue has a fixed price band of INR 305 to INR 306 per equity share.

The Lot Size and Minimum order Quantity

The bid for the IPO can be made for a minimum of 49 equity shares and in multiples of 49 shares. This means that the amount for each lot of 49 shares is INR 14,945-14,994.

However, an investor can bid for a maximum of 13 lots constituting a maximum of 637 shares.

Details of Capital Allocation

To finance its working capital (Rs. 230.00 cr.) and general corpus fund needs, ABL is coming out with a maiden IPO with a combo offer of fresh equity issue (Rs. 300 cr.) and offer for sale (Rs. 300 cr.). It consists fresh equity issue of approx 9803922 shares of Rs. 10 each (at the upper price band) and offer for sale of 9803922 shares. Thus the overall issue will be for approx. 19607844 equity shares. 

Having issued/converted entire equity at par, the company raised further equity in the price range of Rs. 21.60 to Rs. 903.81 between November 2007 and March 2018. It has also issued bonus shares in the ratio of 4 for 1 in March 2018.

The total average cost of acquisition of shares by the promoters/ selling stakeholders is Rs. 0.06, Rs. 0.10, Rs. 0.49, Rs. 0.67, Rs. 0.99, Rs. 2.08, Rs. 2.40, Rs. 6.48, Rs. 12.69, Rs. 13, Rs. and Rs. 115.58 per share. Post issue, ABL’s current paid-up equity capital of Rs. 72.00 cr. will stand enhanced to Rs. 81.80 cr. With this issue, the company is looking for a market cap of Rs. 2503.05 cr.

The issue is jointly lead managed by ICICI Securities Ltd., Edelweiss Financial Services Ltd., and SBI Capital Markets Ltd., while Link Intime India Pvt. Ltd. is the registrar to the issue.

Company Financials

Particulars30th June 202031st March 202031st March 201931st March 2018
Total Assets29731.0221592.0521690.5622828.67
Total Revenue2440.867427.797626.477536.55
Profit After Tax381.83866.24766.941010.52
All values are in millions

Important Dates

Bids for Issue open on22 September 2020
Bids for Issue closes on24 September 2020
Finalization of Allotment29 September 2020
Initiation of Refunds30 September 2020
Credit of Shares in Demat Accounts01 October 2020
Listing of the IPO Shares05 October 2020

Why should one invest in the upcoming Angel broking Ltd. IPO?

Angel Broking has been active in the stock market and broking scene from the past 24 years and has established itself as a renowned brand. Moreover, the IPO is announced at the times when the company is experiencing remarkable growth in its business. If that’s not enough to convince you, here are some more reasons why one should invest in the Angel Broking IPO.

1.     Major Retail Broking House

With a market share of 6.3% as of June 2020, Angel broking is currently the fourth largest retail broking company in India in terms of the number of active client accounts on NSE. Along with this, the company has also been adding a new client base at a monthly average of 115,565 clients in the first quarter of FY21. As compared to the monthly average addition of only 46,676 clients for FY20. This is a huge growth of 147%. With such growth, the company is well poised to grow in the near future.

2.     Exceptional Brand Equity

With an experience of more than 20 years in the broking industry, the company has reaped a significant amount of brand equity and respect in the industry. Over the past two decades of its operations, the company has built robust digital and online broking platforms to cater to all kinds of needs of its clients. The company has established well-recognized brands in the stock market including ‘Angel Broking’ and ‘Angel BEES’.

Moreover, the strong brand credibility and presence that the company has established in the industry have a direct impact on its client acquisition process.

3.     Consistent Growth

Angel broking has been witnessing unprecedented growth on all fronts. When considering the gross client addition, Angel broking has gained consistent growth since FY18. In FY18, the gross client addition was 0.22 million, while in FY19 it rose to 0.26 million. The numbers climbed to 0.56 million in FY20 and the first quarter of FY21, the numbers stand at 0.35 million. The impressive growth of clients represents a CAGR of 59.54% from FY18 to FY20.

Additionally, in the NSE platform, the company’s active client base has risen to 0.41 million in March 2019 from 0.36 million in March 2018. Further, the client base in NSE increased by 0.58 million in March 2020 and this number further climbed to 0.77 in June 2020.

The average daily turnover of the company has also seen significant growth. In Q1 FY20, the average daily turnover of the company was INR 253,176 million and these numbers saw a growth of about 1445% and crossed INR 618,945 million in Q1 FY21.

For FY18, the company posted the revenue of INR 764.76 crore and PAT of INR 107.93 crore. The company reported its Profit After Tax (PAT) of INR 829.59 in FY19 and INR 1079 crore for FY18. The company is expected to make a good revenue this year as it has shown a huge growth in the number of operational clients and average monthly revenue.

4.     Diversified Portfolio to cater to the client’s needs

The brokerage firm has been focusing on developing technology-driven platforms and processes over the last two decades. This helped the company cater to all kinds of requirements and needs of its customers.

Some of the industry-leading platforms and tools developed by Angel Broking include a web browser-based trading platform, Angel broking mobile application, Angel BEE, Angel SpeedPro, and ARQ. Along with these platforms, the company also provides a host of other services like investment advisory, investor education, margin funding, loan against shares, and other financial products to its customers.

5.     High Future Growth Potential

With the continuous penetration of smartphones and the internet in the broking industry, a huge amount of young retail investors from Tier-2 and Tier-3 cities are showing interest to invest in the stock market. Over 450 million new investors from these cities have invested in the market. The number is expected to increase further in the coming years.

With advanced technological platforms, Angel Broking is well poised to take the advantage of its pan-India outreach.

How can Retail Investors Subscribe to Angel broking IPO

To apply for Angel broking IPO, a retail investor needs to have an operational Demat account with a broking company. To apply for the Demat Account: 

  1. Login to your Demat account 
  2. Go to the IPO section in your Demat account
  3. Select the ‘Angel Broking IPO’
  4. Place your Bid and the number of lots you want to apply for and click submit.
  5. You can verify your details of the bid on the official website of the exchange the next day of your bid application. 

Conclusion

Considering all these factors, the IPO of Angel broking looks to be an attractive option to invest in for the retail investors. The IPO listing is expected to provide up to 25% of growth, making it a good opportunity for the investors.

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