Angel One

Angel One, a brokerage firm, experienced a significant decline of over 7% in its share price during early trading on Monday. The National Stock Exchange of India (NSE) took action against the company by prohibiting it from onboarding new Authorized Persons (APs) for the next six months. As a result, the stock fell to an intraday low of ₹1,585.00 apiece on the BSE.

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The NSE’s decision came through an order issued on July 14 by the Member and Core Settlement Guarantee Fund Committee. The committee accused Angel One of failing to properly monitor the operations of its APs, leading to alleged violations of the Capital Market Segment Regulations and Futures and Options Segment Regulations of the Exchange. Additionally, the NSE imposed a monetary penalty of ₹1.67 crore on the brokerage firm.

To address the issue, the NSE instructed Angel One to conduct inspections of all its APs and submit a report within the next six months. However, Angel One clarified that the order would not impact its existing business or the activities of the APs affiliated with the company. The firm expressed its intention to explore various options, including the possibility of appealing against the order, emphasizing its commitment to comply with all relevant laws and regulations.

Authorized Persons play a crucial role as market intermediaries connecting investors and stockbrokers. They contribute significantly to Angel One’s net broking revenue and new customer acquisitions. Despite recent challenges in canceling licenses for some APs, the company’s focus on scaling the business through its AP network remains steadfast.

The April-June 2023 quarter showed promising results for Angel One, with a 21.6% year-on-year rise in consolidated net profit to ₹220.8 crore. The company’s revenue grew by 18.4% YoY to ₹807.5 crore. While incremental growth might pose challenges, the existing pool of 21,000+ APs is expected to continue generating revenue and contributing to customer additions.

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Financial experts at Motilal Oswal Financial Services view Angel One as a compelling investment opportunity due to the financialization of savings and digitization. Despite weaker-than-estimated Q1FY24 performance, the company’s traction in volumes and overall activity has shown improvement. Motilal Oswal reaffirms its Buy rating on the stock and sets a revised target price of ₹2,050.

At 10:15 am, Angel One shares were trading 5.13% lower at ₹1,619.90 apiece on the BSE.

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