Angel One (Angel) continued with its strong performance in Q3-FY23 in terms of client additions (average of about 10 lakh per quarter in 9MFY23), growth in the number of orders (average monthly run-rate of about 7.4 crore in 9MFY23) and cost discipline (total ‘opex to sales’ of 48 per cent in 9MFY23). These strides are reflected in 9.5 per cent and 11 per cent increase in our EPS estimates for FY23E and FY24E respectively.
Our optimism has also been inspired by the robust growth in overall equity option volumes on NSE (126 per cent CAGR over the past two years). We remain positive on Angel considering its track record (about 3x growth in number of orders over the past two years) and strong position (21.5 per cent retail volume share as of Q3FY23).
Risks include sharp drop in market volumes and any regulatory action to curb volume growth (especially in equity options). We factor-in a 19 per cent earnings CAGR over FY22-FY24 and expect PAT of ₹940 crore in FY24. We maintain out Buy rating with a target price of ₹1,980 (unchanged) based on 18x FY24E EPS (20x earlier) of ₹110. The cut in multiple is due to the near-term risk of lower order growth on a high base.