Angel One Q1 Review: Investec Maintains ‘Buy’ Rating Amid Market Challenges
Investec has maintained its ‘buy’ rating on Angel One Ltd., setting a target price of Rs 2,700, despite a challenging first quarter for the financial services firm. The brokerage expects the company to deliver a modest total return forecast of 2.4%.
The Q1 performance of Angel One was better than expected, with the company reporting a Profit After Tax (PAT) of Rs 1.14 billion, a significant 61% year-on-year decline. However, this figure still managed to beat Investec’s estimates by 9%, primarily due to lower-than-anticipated operating costs.
The year-on-year revenue decline is attributed to several factors, including new F&O regulations, weak market sentiment impacting volumes, and ‘true to label’ regulations that affected other operating income. Broking revenue declined 23% year-on-year, but was up 7% quarter-on-quarter. Net interest income grew by 15% year-on-year and 6% quarter-on-quarter, while other operating income, despite a 52% year-on-year decline, improved by 11% quarter-on-quarter.
Operating costs remained flat year-on-year but increased by 23% quarter-on-quarter. This included IPL-related expenses of Rs 1.12 billion, comparable to Rs 1.14 billion in the previous year. Adjusted against this, non-employee expenses declined 10% quarter-on-quarter.
The Ebitda margin, however, saw a significant contraction, dropping to 22% from 38% in the first quarter of fiscal year 2025 and 32% in the fourth quarter of fiscal year 2025.
Despite an overall tough quarter, Investec points to strong traction in Angel One’s new initiatives, underscoring its potential to drive future growth. Credit disbursements surged to Rs 2.3 billion in the first quarter, with a 123% quarter-on-quarter increase, with Investec expecting further ramp-up in fiscal year 2026 following the addition of Kredit Bee as a new lending partner.
As of June 2025, Wealth Management Assets Under Management (AUM) stood at Rs 50.7 billion, with a client base exceeding 1,000, and is expected to maintain its growth momentum in FY26. Mutual Fund distribution AUM also grew to Rs 138 billion from Rs 111 billion as of March 2025, and the Asset Management Company AUM reached Rs 3.4 billion as of June 2025.
Investec acknowledged that FY25 was a weak year for Angel One due to multiple headwinds. However, the brokerage expects these effects to be largely absorbed into the base by the fourth quarter of FY26.
The brokerage expects revenue and earnings growth to improve on a quarter-on-quarter basis. The first quarter’s revenue growth was better than Investec’s expectations, coupled with the positive momentum in new initiatives. The company has a conference call scheduled for July 17, where further insights are expected.
Angel One’s Q1 performance may not have been spectacular, but the company’s efforts in new initiatives will likely drive growth in the future. As the company navigates the challenges, investors will be looking for signs of improvement in the coming quarters. The company’s conference call on July 17 will be closely watched for further insights.
