Business Model of Angel One Limited

I. Client Acquisition & Demography: The company focuses on acquiring a younger and new-to-market clientele. With the average age of the clients it acquired in FY24 being 29 years old, this client base may provide the company with some advantages, such as, the younger and newer client base might engage with the company longer and more frequently. This advantage shows as 54% of the total clients acquired in FY21 and 49% of the clients acquired in FY22 have transacted with the company till FY24. ²

As of FY24, ANGELONE has 5.8 million clients who reside in Tier-3 cities, whereas Tier-2 cities contribute 2 million and Tier-1 cities have 1 million of the company’s clients. This focus on the tier-2 and tier-3 cities has given the company access to a lesser sought-after client base and the opportunity to ascertain itself as a major brand in this demographic. ²

V. Transaction Execution: ANGELONE’s total orders grew by 52.2% YoY and reached 1.4 billion in number. The company also handled over 10 million orders in one single trading session. The average daily turnover increased by 143.5% YoY to ₹33.2 trillion. This has demonstrated the ability and efficiency of the company's Super App and platforms.

VI. Investor Education: The company has a dedicated knowledge center on its website to enhance the skills and understanding of young, first-timers or anyone who wants to expand their knowledge spectrum. The company also has facilities like blogs, live blogs, and a comprehensive glossary for numerous financial terms to help its customer base have an easier and simpler experience. ANGELONE has also invested in platforms like Smart Money which have numerous modules that teach people about money management where they can learn at their own pace.

VII. Research & Analysis: The company provides research that covers different areas of the capital markets such as equity fundamentals, derivatives, commodities, and currency. ANGELONE has a team of 46 members which is dedicated to curating these services to its clientele. The company even provides its customer base with complementary in-house research.

VIII. Additional Offerings & Partnerships: ANGELONE has several additional facilities like ARQ Prime, SmartAPI, and NXT which assist its customers. The company has also partnered with numerous platforms such as Smallcase which provides thematic investment options, Vested which provides a platform for investing in U.S. listed securities, Sensibull which offers strategies regarding options trading and Smart Money which offers education about financial markets.

Exhibit 1: Comprehensive Value Chain, which incorporates components ranging from client acquisition to research & analysis

Source: Company Research

Revenue Model ³ :

i. Futures & Options: The company charges ₹20 per executed order for F&O transactions.

ii. STT Equity F&O: The charge for STT Equity Future is 0.02% on the sell side, and for STT Equity options it is 0.1% on sell side.

Revenue Model ³ :

i. Stock Investments: The company charges ₹20 or 0.1% per executed order, whichever one is lower with a minimum of ₹2.

ii. Intraday Trading: For intraday trading, the company charges the lower of ₹20 or 0.03%.

iii. STT Equity: The company charges a rate of 0.1% on both buy and sell side for STT Equity delivery, while for STT Equity Intraday the charge is 0.025% on sell.

iv. GST: 18% per transaction.

v. SEBI Charges: ₹10 per ₹1 crore transaction.

Revenue Model ³ :

i. Currency F&O: ANGELONE charges ₹20 per executed order for both currency futures and currency options.

ii. Commodities F&O: The company has the same pricing as Currency F&O for Commodities F&O, ₹20 per executed order.

iii. CTT: The Commodities Transaction Tax charge is 0.01% on the sell side.

Revenue Model ³ :

i. Account Maintenance: For BSDA (Basic Services Demat Account) which have value of holdings between ₹4 lakh to ₹10 lakh ANGELONE has a fee od ₹100+GST per year. For non-BSDA account holders a fee of ₹60+GST per quarter is charged.

ii. Call & Trade: The company has a ₹20 fee per order for the call and trade facility.

iii. DP Charges: ANGELONE charges ₹20+GST per ISIN debit for Equity, while for others, the company charges ₹16.5 for males and ₹16.75 for females plus the CDSL charges.

iv. Demat Charges: The company charges ₹50 per certificate for converting physical equity shares to a digital format.

v. Remat Charges: The company charges ₹50 per certificate to convert digitally held shares to a physical certificates.

vi. Physical Documents: ANGELONE charges ₹50 for providing physical statements, DIS statements, and Physical Contract Notes.

II. Growth in Trading Volume

ANGELONE’s total orders grew by 52.2% YoY and reached 1.4 billion in number. The average daily turnover increased by 143.5% YoY to ₹33.2 trillion. The company also saw significant growth in the average monthly client acquisition rate from 392,000 in FY23 to 732,000 in FY24 which led to a growing client base that increased by 61.5% YoY to 22.2 million in FY24 and a gross client acquisition of 8.8 million which increased by 86.5% on YoY basis.

III. Market Share

The company has a 14.7% share in India’s Demat Accounts and a 14.99% share in the NSE active client base. The commodity segment offered by ANGELONE holds a noteworthy market share of 58.1%, hitting an all-time high, while the company’s share in overall retail equity turnover was 17.1%.

IV. Client Demography

52% of the company’s acquired client base in FY24 was younger than 25 years old and approximately 89% of the gross client addition consisted of cities beyond tier-1, in which 5.8 million came from tier-3 cities and lower. With an asset light model, ANGELONE has managed to focus more on the younger generations from beyond tier-1 and metropolitan cities.

Exhibit 3: The company’s Client Demographics show that 65.9% are from tier-3 & beyond cities and 52% are younger than 25 years, showcasing the company’s focus on younger clients from beyond metro and tier-1 cities

V. Revenue Structure

ANGELONE has a competitive and simple-to-understand pricing model regarding its broking and depository operations. Although the company provides some complimentary services to new customers to add value and retain them. The growth in revenue proves the effectiveness of this structure.

VI. Asset-Light Model

The company has adopted a digital first approach, switching to offering services to its clients through its Super App platform, which is available on iOS, web, tab and android. This approach has helped the company to reach out to a wider number of clients, such as people living in tier-2, tier-3 cities and beyond, and has also appealed to the younger generation of investors and traders who are tech-savvy. Theses points are highlighted in the client demography.

VII. Strategic Partnerships

The company has numerous partnerships to increase its revenue streams and diversify its services. Through its open API architecture, it has integrated applications such as smallcase, Sensibull, Streak which offer investing options and strategies. Furthermore, the company has partnered with platforms like Vested, Quicko and MarketMojo to provide its client base with the opportunity to trade in U.S. listed securities, provide stock research and assist in planning and filing taxes for both individuals and businesses.

B. Margin Funding

In the cash delivery segment of equities, ANGELONE offers its clients margin funding up to 80% of the purchase value, while also offering Trade+6 days (T+6) funding to its customer base. This segment earned a revenue of about ₹2.8 billion which grew by 8% YoY and made up 6.6% of the total income in FY24.

The company saw impressive growth in the interest income, which increased by 51.3% YoY. This was facilitated by a significant growth in the average client funding book, which increased by 7.9% YoY, reaching ₹16 million in FY24 from ₹14.8 billion in FY23.

I. Client Diversification

The company’s client funding book was spread over 0.15 million clients out of which, 25.7% were towards companies with over ₹1 trillion in market capitalization, 51.9% were towards, companies with market capitalization of ₹0.1 to ₹1 trillion and the rest went towards companies with a market capitalization of under ₹100 billion.

II. Client Exposure

Across the 0.15 million clients, the average exposure per client was of over ₹0.1 million. Moreover, 88.7% of the clients had exposures of less than ₹0.1 million, 6.9% of the clients had exposures between ₹0.1 to 0.5 million and the rest 4.4% were the ones with exposures above ₹0.5 million.

III. Revenue Streams ³

• Cash Collateral: The company charges 0.034% per day for cash and cash equivalent margin exceeding ₹50,000.

• MTF Borrowings: ANGELONE charges 0.041% per day for the clients who have availed the margin trading facility from them.

• Debit Balance: The company has a charge of 0.049% per day for clients who have a debit balance in their accounts.

• Pledge Charges: The company charges for the service of pledging, unpledging or invoking the pledge in addition to the CDSL charges. The fee for availing this facility for MTF is ₹8, for CUSPA is ₹15 and for Margin is ₹15 plus GST.

IV. Risk Management

The company monitors real time mark-to-market value of underlyings, making sure the customer’s margins are adequate. To avoid exposure to any single client or security, ANGELONE does its own due diligence, in addition to the regulatory guidelines and filters the list of stocks to be funded and covers about 60% of the stocks it deems to be up to the mark.

V. Minimal Delinquencies

ANGELONE has maintained low delinquencies in its client funding book by complying with the extant regulations and having its own risk management system while maintain transparency and daily reporting.

Exhibit 4: The company has minimized its Risk Exposure by making sure 77.6% of its client base is diversified more to companies with a market capitalization of more than ₹0.1 trillion, reducing average client exposure to ₹0.1 million

C. Cross-Selling

ANGELONE offers its customers third-part financial products such as mutual funds, IPOs, bonds and through its wholly-owned subsidiary it provides them insurance, which has diversified the portfolio of services the company offers its clients. With the segment’s revenue growing by 32.2% YoY, it earned the company a sun of ₹414 million in FY24.

I. Mutual Funds

The company introduced mutual funds on its platform in the late FY23 and provides its customers with research recommendations by its ARQ engine and third-party rating services. ANGELONE had a 130.6% YoY growth in the mutual fund distribution AUM, reaching to ₹49.4 billion in FY24.

II. Insurance

The company distributes insurance products through its wholly-owned subsidiary, Angel Financial Advisors Private Limited (AFAPL), which is an IRDAI-registered corporate agent. In the FY24, the company generated premiums equivalent to ₹989.4 million, a 7.6% YoY increase. This facilitated a growth of 47.7% YoY in income from the insurance segment which amounted to ₹124.7 million in the FY24.

III. IPOs

ANGELONE provides information about upcoming IPOs and enables its client base to apply for the same on their platform. The company distributed 78 IPOs in the FY24, leding to a 31.5% YoY growth in its revenue which amounted to ₹103.7 million.

IV. SIPs

During the FY24, the company reported  a 13.3x growth in unique SIP registration, where the number grew from 0.7 million in FY23 to 3.5 million in FY24, facilitating the growth in the mutual funds segment.

V. Bonds

Through its digital platform, the company distributes Sovereign Gold Bonds issued periodically by the Reserve Bank of India (RBI).

VI. Future Prospects

The company plans to expand into Asset Management services, having acquired the in-principal approval from SEBI and is awaiting the final approval. Moreover, ANGELONE also has Wealth Management in its future vision and has on-boarded a team of experienced co-founders. These endeavors will expand the portfolio of services offered by the company and diversify its revenue streams.