Angel One Ltd (ANGELONE) Q2FY27 Concall Transcript - Sep-2026 Qtr
Moderator: Ladies and gentlemen, good day, and welcome to the Q2 FY '25 earnings conference call, hosted by Angel One Limited. This conference call may contain forward-looking statements about the company,
Moderator: which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of the future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hitul Gutka from Angel One Limited. Thank you and over to you, Mr. Gutka.
Hitul Gutka (Angel One Limited): Good morning and welcome, everyone. Thank you for joining us today to discuss Angel One's Q2 FY '27 financial and business performance. The recording of today's earnings call and transcript will be uploaded on our website under the Investor Relations section. The financial results, investor presentation, press release, and databook are also uploaded on the website. We would like to inform that Mr. Dinesh Thakkar, Chairman and Managing Director of Angel One, is unable to join today's call. Angel One will be represented today by Mr. Amreesh Kenghe, Group CEO; Vineet Agrawal, Group CFO, along with the senior management team of Angel One and SGA, our IR consultants. The leadership team will give us a brief overview of the operational and financial performance of the quarter gone by, followed by Q&A session. Please note that there may be certain forward-looking statements during the call, which must be viewed in the aggregate with the risks that the company faces. With this brief introduction, I now invite Mr. Amreesh Kenghe for his opening remarks.
Amreesh Kenghe (Angel One Limited): Thank you, Hitul. Good morning, everyone, and thank you for joining us today. This wasn't a typical quarter, but I am very proud of how our teams and partners handled it to deliver a very strong performance. As you know, there have been some regulatory changes that have impacted the market volumes. However, as we have always maintained, regulatory changes are designed to make our market stronger, even if sometimes the refinement and the ecosystem adjusting to it may take time. You saw a bit of it this quarter. However, the Indian capital markets and the economy continue to be strong, with the GDP growing at 7.8% last quarter, no mean feat at this scale. As I mentioned earlier, I am very proud that our users, partners, and teams adapted fast. In September, average daily orders rebounded to 5.8 million, up nearly 12. 12% from August. Despite the regulatory environment, our consolidated revenue and PAT grew 18.9% and 58.2% year-over-year, respectively. And the stand-alone OPM was at 48.9%, which is above the range we have been guiding you. This is a proof point of our strategy and execution. And of course, the strength of capital markets ecosystem in India. The road a- road ahead is also getting clearer with SEBI's circular yesterday evening on updates to closing auction session, CAS. This will bring greater clarity to traders, and we expect that to create some tailwind for us. 40 million Indians have chosen Angel One as their way into the markets. We welcomed nearly 1.5 million new clients this quarter, 11.6% more than Q1, and we did it while keeping acquisition costs well under control. We also witnessed growth in our NSE active client base, leading to an expansion in our active clients market share month-over-month in each month of this quarter. And here's another interesting number you'd like to take away: our average client funding book reached a lifetime high of rupees 74.5 billion, up about 40.5% from a year ago. Our overall equity retail market share based on option premium turnover stood at 19.7%. In the derivatives, we held our position with a retail turnover share of 22.1% for the quarter, and it rose to 22.5% in September, even as our market share in cash moderated. In commodities, our turnover more than doubled over last year. Our share came down to 44% because of market expansion, owing to more participants entering the market, which is a sign of how fast the segment is growing. We are one of the leading players now in a much bigger market.
Amreesh Kenghe (Angel One Limited): On investing, our SIP registrations grew nearly 12% over Q1. For many of our clients, mutual funds becomes the first engagement on the platform. Credit is where I'm especially excited. Responsible credit is a tremendous opportunity for India, and the journey is just getting started. In September, we delivered our highest ever credit distribution, taking our annualized run rate to ₹33 billion. That is powered by continuous advances in our AI and ML capabilities. Our credit models run on a continuous data flywheel of learning, iteration, and refinement. This helps us sharpen risk assessment, making sure that we show loan offers to the appropriate cohorts, reducing risk for consumers as well as our lending partners. We upgraded our probability of default model and launched the early beta of our loan against securities offering. As we have always guided, we will scale this business with discipline and responsibility. With a client base of this size, the opportunity in front of us is very large. Our wealth business is gaining depth as well, with Ionic Wealth's AUM at ₹160 billion, up 19.1% over Q1 FY '27. The regulatory backdrop is also turning positively supportive with SEBI's board approving new portfolio manager regulations. A wider product shelf means platforms like ours can offer clients richer, more diversified portfolios. In asset management, our AUM stands at nearly ₹6 billion, and we are evaluating a comprehensive play in this business, including bringing a new leader to build, scale, and build and scale it. We'll share more in future quarters. Two developments give us new ways to serve our customers. First, we have received authorization to operate as a global access provider in the IFSC. With that, we are piloting US stocks on our platform. We're excited about providing a simple way for our users to access the largest market in the world. Second, IRDAI's September consultation paper proposes a reset of insurance commissions with the aim to lower insurance costs, thus bringing the product within reach of many more Indians. It's still a proposal, but we believe a lower cost, more transparent model is good for the consumers and favors digital platforms like ours, which can reach clients at scale and add insurance to the financial relationships we are already building. What ties this together is our technology capabilities and a platform built to be product agnostic. We can go deeper across capital markets, wealth, credit, and other financial services. Each edition deepens the relationship, raises lifetime value, and unlocks operating leverage without a proportionate rise in cost. And that compounds across customer economics, profitability, and enterprise value. Now, AI. For us, it's becoming a shared intelligence layer across the group, embedded in our business, products, and operations. For customers, it makes discovery, engagement, support, and personalization better. Inside the company, it speeds up productivity, automation, and decision-making across functions. All of these sit with a strong governance and security framework, which is critical as we scale the AI-first operating model, because security and trust are non-negotiable. This quarter, we strengthen our cyber security stack with AI-driven vulnerability detection and automated remediation workflows, improving our resilience and reducing risk exposure. To sum up, Q2 tested us and the platform held up. A record funding book, nearly 40 million clients, orders recovering, standalone margins above the upper end of our range, and a credit business that's starting to scale further. India's financial journey is a long one. We are building Angel One to be with our client every step of the way in this journey. Thank you, and I'll now hand over to Vineet, our Group CFO.
Vineet Agrawal (Angel One Limited): Thank you, AK. Good morning, everyone. Let me take you through our financial performance for the quarter and highlight a few underlying trends that I believe are particularly noteworthy. We delivered a strong earnings performance in quarter two, notwithstanding a relatively
Vineet Agrawal (Angel One Limited): subdued capital markets environment. Consolidated gross revenues stood at Rs 14.3 billion, growing 18.9% year-on-year and remaining broadly stable sequentially, despite moderation in trading activity. What is particularly encouraging is the strength of our profitability. Consolidated operating profit grew 52% year-on-year to Rs 4.9 billion, while the consolidated profit after tax increased 58% to 3.35 billion rupees. The significant outperformance of earnings growth relative to revenue growth reflects the operating leverage and growing earnings capacity of our business. An important development has been the continued evolution of our revenue composition. Gross broking income now accounts for approximately 55% of total revenues, compared with nearly 60% a year ago. Interest income grew 34% year-on-year and 9% sequentially to Rs 5.1 billion, supported by the continued expansion of our client funding book. The average client funding book increased over 40% year-on-year to Rs 74.5 billion, while the closing book reached a record 82.1 billion rupees. Importantly, the number of funded clients increased by nearly 30% over the last year to 437,000, reflecting broader client adoption. Distribution income also recorded healthy growth, supported by strong credit distribution and IPO activity. The increasing contribution from these businesses is progressively broadening our earnings base and enabling us to monetize our growing client franchise beyond transaction-led income. Moving to profitability, consolidated operating margins stood at 45.1%, compared to 34.5% in the corresponding quarter last year, an expansion of over 1,000 basis points. At the standalone level, operating margins reached 49 48.9%, exceeding our guided range of 40% to 45%. Importantly, after normalizing for seasonal IPL expenditure and ESOP-related reversals, consolidated operating margins remained stable at 43.8% compared to 43.6% in the preceding quarter. This stability in underlying margins, despite softer trading activity and continued investment in growth, reinforces our confidence in the operating efficiency and scalability of our business. While quarterly margins will naturally fluctuate depending on market activity, seasonality, and the timing of investments, we remain confident in our ability to sustain standalone operating margins of around 45% on an annual basis. This provides us with the flexibility to continue investing in future growth opportunities while maintaining a healthy balance between growth and profitability. Coming to our balance sheet, net worth increased to Rs 67.1 billion compared with Rs 58.3 billion a year ago. Borrowings stood at approximately 75.5 billion rupees, largely reflecting the expansion of our client funding portfolio. The underlying portfolio remains granular and well collateralized. Approximately 84% of client funded clients have exposures below 1,00 100,000 rupees, while 82% of the closing book is less than 30 days old. Delinquencies remain negligible, reflecting the quality of the portfolio and our robust risk management practices. As the funding business scales, we remain focused on maintaining adequate liquidity, optimizing funding costs, and ensuring prudent capital deployment. The board has also approved the second interim dividend for this financial year of Rs 1.4 per share, with October 22, 2026 as the record date. Before I conclude, I would like to put on our performance in a broader perspective. Over the last several quarters, we have been steadily strengthening our earnings capacity of our business through an expanding revenue base, deeper client monetization, and improved of operating efficiency. An important characteristic of our financial model is that the customer acquisition costs are largely incurred upfront, while existing customer cohorts continue to contribute revenues over time with relatively low incremental servicing costs. As customer relationships mature and product adoption deepens, this creates meaningful opportunities for incremental earnings and operating leverage. What is particularly reassuring is that we are seeing the benefits of this model even during periods of relative
Vineet Agrawal (Angel One Limited): subdued trading activity. As market conditions become more supportive, we believe our broader earnings base and scalable operating infrastructure positions us well to capture incremental opportunities and translate them efficiently into profitability. Our financial priorities remain clear, maintain healthy margins, strengthen return on capital and ensure that our investments translate into sustainable, long term shareholder value. Overall, Q2 reinforces our confidence in the financial strength, scalability and long term earnings potential of Angel One. With that, we would be happy to take your questions. Thank you.
Moderator: Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabha Mukherjee from 361 Capital. Please go ahead.
Swarnabha Mukherjee (361 Capital): Sir, thank you for [inaudible] congratulations for the great performance in this report.
Moderator: Sir, your voice is breaking. Swarnabha sir.
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