Shares of Angel One rallied by around 8% on 15th October, following the release of an impressive set of earnings for the quarter ended September 2024 (Q2 FY25). The discount broker posted significant growth in both net profit and revenue, marking a positive trend in its financial performance. Here's a closer look at the company's Q2 results and what contributed to the surge in its stock price.
Strong growth in net profit and revenue
Angel One reported a 39.1% year-on-year (YoY) increase in net profit, reaching ₹423.4 crore in Q2 FY25. The company's revenue also witnessed a substantial 44.5% YoY growth, totalling ₹1,514.7 crore during the same period. This robust growth came on the back of increased trading activity, which has been driving the company's financial performance.
Rise in market share and client base
The company's market share in the overall retail equity turnover rose to 19.3%, indicating an improvement across various segments. The number of demat accounts managed by Angel One grew to 15.7% of the market, up from 13.2% in the corresponding period last year. Its total client base surged by 61% YoY to 27.5 million as of 30th September, reflecting strong customer acquisition. The company added 3 million new clients during the quarter, a 41% increase from the previous year, demonstrating its successful efforts to attract more investors who are keen to invest in stocks.
Impressive operational performance
Angel One's operational metrics also saw significant improvement. Earnings before interest, tax, depreciation, and amortisation (EBITDA) grew by 51.5% YoY to ₹671.9 crore. The EBITDA margin expanded by 210 basis points, reaching 44.4%, compared to 42.3% in Q2 FY24. The number of orders placed on the company's platform also increased by 44.5% YoY, reaching 489 million during the quarter. This indicates a notable uptick in trading activity as more investors continue to invest in stocks.
Higher expenses driven by talent acquisition
Despite the growth in profit and revenue, Angel One's expenses rose during Q2. The company attributed the increase to higher employee and stock options costs, primarily due to onboarding talent in areas such as wealth management, technology, product development, and data analytics. These investments are expected to strengthen the company's long-term capabilities, particularly in the competitive discount broking space, where it faces rivals like Zerodha, Groww, and Upstox.
Share price movement and recent performance
The surge in Angel One's stock followed a 1% gain in the previous trading session, with shares closing at ₹2,729.95 on the National Stock Exchange (NSE). Although the stock has dropped around 24% so far this year, underperforming Nifty's 15% return, it has risen approximately 31% over the past year, compared to Nifty's 27% gain.
The recent rally is seen as a response to the company's strong Q2 performance, which reassured investors of its growth prospects. For those looking to invest in stocks, Angel One's positive earnings trend may signal an attractive opportunity.
Conclusion
Angel One's impressive Q2 results, characterised by strong net profit and revenue growth, have certainly buoyed investor sentiment. The rise in market share, coupled with a robust increase in client acquisition and trading activity, suggests that the company is poised for continued growth. For investors looking to invest in stocks, the stock's recent performance may indicate a promising opportunity. However, one should consider the broader market conditions and company-specific factors when making investment decisions.
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