“Ideally, since the measures are aimed at reducing customer losses (if implemented), the longevity of the customer in the system increases. Additional products will only add to the LTV in the longer term, thus giving the company the ability to spend on higher acquisitions,” said domestic brokerage firm Motilal Oswal.
With new regulations in place, Angel One and its peers face a choice: absorb the impact on margins to gain market share, or raise fees and risk losing some market share in the short term.
Motilal Oswal stated that in FY26, if the number of orders for Angel One falls by 10% instead of 16% growth, factored in their estimates, and the company does not take a price hike or prune its customer acquisition costs, earnings will be down 33% as compared to our current estimate.
Against this, if the company increases its average gross broking realization from Rs 19.7 to Rs 25, the impact on earnings will be largely nullified.
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The company demonstrated its willingness to protect profitability through the pricing action announced, wherein the cash delivery broking charges were increased from nil to Rs 20/order or 0.1% per executed order.
In the past, the company has used customer acquisition as a variable lever to offset the impact in terms of a slowdown in volumes.
“ANGELONE could see a transitional hit to earnings as the regulations are implemented and the company gauges the impact before making corrective actions. However, we believe the company is in a transformational phase wherein share of financial products distribution (loans and fixed income), wealth management and AMC, will start contributing meaningfully over the next couple of years,” Motilal Oswal added.
Shares of Angel One have gained 50.2% in the last one year while on a year-to-date basis, the stock has decreased by 23%, according to BSE analytics.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)