Catalysts - Angel One Limited

NSE: ANGELONE

1. Expanding into Asset Management: ANGELONE has received the in-principal approval from SEBI to start providing asset management services and is currently waiting for the final approval. The company aims to provide low-ticket-size clients with diverse investment options that match their risk profile and investment preferences. ANGELONE plans to use a passive investment strategy and ETFs, seeking to not only expand its market share by providing new offerings but to also, retain existing clients. This expansion will also help in diversifying the company’s revenue streams.

2. Branching out to Wealth Management: The company also plans on branching out into wealth management, having hired a team of 50 seasoned wealth managers and tech experts, who have specialized in this segment. ANGELONE has roughly three phases planned, they first want to target Ultra-High-Net-Worth-Individuals (UHNIs) and High-Net-Worth-Individuals (HNIs) by leveraging technology and the experience of co-founders. Next, the company plans to target affluent and emerging HNIs. Then, finally, in the long term, ANGELONE has plans to take these services to the level of retail investors as well.

3. Increased Retail Participation: In FY24, there were about 9 crore registered investors at the NSE, and there were roughly 15 crore demat accounts overall. India has seen an immense increase in activities relating to capital markets in recent years, where the share of retail investors came to about 35.9% in FY24, according to the Economic Survey 2023-24. The increase in financial literacy coupled with the rise of disposable income has led to this rise in several retail investors, providing extreme potential for growth in the financial services industry, especially the broking segment.

4. Growth in Investors Beyond Tier-1: Around 65.9% of ANGELONE’s clients acquired were from tier-3 and beyond cities. This gives rise to an extremely profitable opportunity for the company to keep its focus on these areas to acquire a less sought-after client base and even establish itself as a market leader in that demographic.

5. Rise of Market Share of Discount Brokers: The top 5 discount brokers in India had a combined market share of 64.6% in July 2024. This share is said to increase even more as people turn away from traditional full-service brokers to online discount brokers. This trend has been seen with ANGELONE’s 61.5% YoY increase in client base. As retail participation is increasing, the market share of online discount brokers is set to increase due to their rise in popularity.

6. Increase in Disposable Income: The per capita disposable income of India was expected to be ₹2.14 lakh in 2023. This per capita disposable income grew 8% in FY24 and 13.3% in FY23. ²⁷ As this income rises, there is set be increased participation from the middle-class population seeking broking and allied services at cost-effective rates. This will lead the share of discount brokers to increase even more.

7. Client Acquisition & Retention Rate: The company’s average monthly client acquisition rate was 732,000, leading to a gross client acquisition of 8.8 million, a number which increased by 86.5% YoY. At the year-end, the company’s total client base came to about 22.2 million, increasing by 61.5% in FY24. As the number of NSE active clients and demat accounts rise, there is set to be an increase in the acquisition rate even further, providing an opportunity for ANGELONE to grow its market share. Moreover, the company’s retention rate shows that 54% and 49% of the total clients acquired in FY21 and FY22, respectively, transacted with the company till FY24. This exhibits a healthy retention rate, indicating a positive response and confidence among customers leading to stability in the retention ratio. This ensures that the company will maintain its position as one of the top discount brokers in the country.