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    Angel Broking IPO opens for bidding: Here’s what top brokerages say

    Synopsis

    The issue comprises fresh issuance of shares worth Rs 300 crore and offer for sale of Rs 300 crore by promoters and other shareholders. The proceeds of the offer would be utilised for meeting working capital requirements and for general corporate purposes.

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    Astha Jain, Research Analyst at Hem Securities, said Angel Broking has a strong client base with presence in the online and digital platform. It has a significant market share in cash and commodity segment.
    The Rs 600 crore IPO of Angel Broking opened for subscription on Tuesday. The company has fixed a price band at Rs 305-306 per share.

    On Monday, the broking firm raised Rs 180 crore by allotting 58.82 lakh shares to 12 anchor investors ahead of its initial public offer. Anchor investors include Goldman Sachs, IIFL, Bajaj Allianz, Max Life Insurance and domestic mutual funds such as ICICI Pru, HDFC, Sundaram, Nippon, Invesco and Birla.

    The issue comprises fresh issuance of shares worth Rs 300 crore and offer for sale of Rs 300 crore by promoters and other shareholders. The proceeds of the offer would be utilised for meeting working capital requirements and for general corporate purposes.

    Here’s how different brokerages rated the issue:

    Samco Securities: Apply for listing gains
    Nirali Shah, Senior Research Analyst, Samco Securities, said Angel Broking has an ability to use technology to cut down on costs which gives it an edge against traditional brokers. She said the broking firm has witnessed consistent growth in customer base helping it command a market share of 6.3 per cent, making it the fourth largest broker in terms of active clients.

    “The pandemic has been a boon for the broking business as the number of retail investors have increased substantially. However, Angel Broking is valued at a price-to-earnings multiple of 26.6 times which is slightly higher than expected. We recommend market participants to subscribe to this IPO for listing gains only,” said Shah.

    Choice Broking: ‘Subscribe’
    Being one of the early movers in the brokerage industry and over two decades of experience, Choice Broking believes Angel Broking assessed the technological development trend in the earlier stage and hence made advanced progress in digital platforms. “With app like Angel Broking Mobile, Angel BEE, SpeedPro and NXT, the company has planned to leverage the growth opportunity in India’s under-penetrated brokerage industry,” the brokerage said while giving a ‘Subscribe’ rating to the issue.

    Anand Rathi: ‘Subscribe’
    Anand Rathi Shares and Stock Brokers said Angel Broking’s emphasis on providing clients with services through technological platforms has enabled it to rationalise the cost incurred and offer simplified and competitive pricing to clients along with value-added services.

    It said the company’s brokerage revenue accounted for 69.54 per cent of the total, whereas revenue from lending activities, income from depository operations, portfolio management services, income from distribution, and other activities formed 30.46 per cent of total revenue in FY2020. The brokerage believes Angel Broking IPO is fairly priced at current price band considering its financial performance and growth prospects. Anand Rathi Shares and Stock Brokers has a ‘subscribe’ rating on the issue.

    YES Securities: Subscribe for listing gains
    The brokerage said Angel Broking has significantly outperformed industry in terms of client additions with share in incremental dematerialisation accounts increasing from 4.2 per cent in FY18 to 14.7 per cent in Q1FY21. More than 50 per cent of customer addition happening online and more than two-third clients acquired from tier 2 and tier 3 plus towns. However, it believes that high level of competition in the industry can restrict future growth opportunities for Angel Broking.

    In terms of valuation, YES Securities said the multiples are similar to that of ICICI Securities, which is a much larger player but has a much higher dependence on the branch model. Profitability measured in terms of RoE was at 48 per cent for ICICI Securities, whereas Angel Broking stood at 13.9 per cent.

    Hem Securities: ‘Subscribe’

    Astha Jain, Research Analyst at Hem Securities, said Angel Broking has a strong client base with presence in the online and digital platform. It has a significant market share in cash and commodity segment. Angel Broking also has a track record of continuous growth with strong financial performance. Therefore, Hem Securities has recommended a ‘Subscribe’ rating to the issue.

    KR Choksey: 'Subscribe'
    The brokerage believes the company will continue to update products and services as per requirements to be competitive in the industry while pursuing to deliver high ROEs (over 14 per cent since FY18). Additionally, it has paid dividends to its shareholders for the last three years sustaining more than 20 per cent of dividend payout ratio. Thus, with IPO valuation of around 25 times FY20 annualised EPS, KR Choksey recommended a ‘Subscribe’ to the issue with long term positive view.
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    3 Comments on this Story

    VIPIN Agarwal33 days ago
    I have a very bitter experience with the employees of Angle Broking. Name is Angel but far from the image of Angel. IPO premium is 305 rupees per share which is exceptionally high. After listing it will be available much below with the issue price. Premium should not be more than Rs.50/- per share.
    Pure Souls33 days ago
    don't invest 10rs too because all this company will be swallow our money and run away like rcom r capital
    Tsr The Urbanist33 days ago
    I have exhausted my resources and not applying
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