ANGELONENSEQ4 FY22April 04, 2022

Angel One Limited

16,452words
107turns
16analyst exchanges
0executives
Key numbers — 40 extracted
90 million
a landmark year for the broking industry. As of March this year, the country had nearly 90 million demat accounts, representing about 18% of CAGR over the past 20 years despite multiple headwind
18%
stry. As of March this year, the country had nearly 90 million demat accounts, representing about 18% of CAGR over the past 20 years despite multiple headwinds on the way. Most of this growth has c
rs,
years despite multiple headwinds on the way. Most of this growth has come over the past five years, during which industry has grown at approximately 30% of CAGR. This has been a result of massive
30%
this growth has come over the past five years, during which industry has grown at approximately 30% of CAGR. This has been a result of massive changes in ecosystem, along with significant reforms w
35 million
n FY2022 set a new records in terms of investors participation. For example, India added nearly 35 million new demat account, representing year-on-year growth of around 63%. On an incremental basis, India
63%
le, India added nearly 35 million new demat account, representing year-on-year growth of around 63%. On an incremental basis, India opened 2.4 times more demat accounts in FY2022, than FY2021. This
6.4%
han FY2021. This led to a steady improvement in equity penetration, which today stands at about 6.4% compared to over 4% last year. However, even at this level, we are far behind our global peers.
4%
o a steady improvement in equity penetration, which today stands at about 6.4% compared to over 4% last year. However, even at this level, we are far behind our global peers. Furthermo
INR 69
in terms of average daily turnover for entire industry. ADTO on NSE grew 2.6 times in FY2022 to INR 69 trillion from INR 27 trillion last year. This growth have been fueled by increasing retail partici
INR 27
daily turnover for entire industry. ADTO on NSE grew 2.6 times in FY2022 to INR 69 trillion from INR 27 trillion last year. This growth have been fueled by increasing retail participation. The share of
41%
easing retail participation. The share of the retail investor in cash segment of the NSE stood at 41% in FY2022 compared to 33% in FY2016. Direct investments for retail investors in cash segment of
33%
The share of the retail investor in cash segment of the NSE stood at 41% in FY2022 compared to 33% in FY2016. Direct investments for retail investors in cash segment of NSE in FY2022 have been str
Guidance — 20 items
Dinesh Thakkar
opening
“As of March this year, the country had nearly 90 million demat accounts, representing about 18% of CAGR over the past 20 years despite multiple headwinds on the way.”
Dinesh Thakkar
opening
“Most of this growth has come over the past five years, during which industry has grown at approximately 30% of CAGR.”
Dinesh Thakkar
opening
“This phenomenon is being replicated in India and over the next decade, I expect we will achieve 25% to 30% penetration.”
Dinesh Thakkar
opening
“Going forward as we commence the journey of rolling out our super app in phases, starting this quarter, we are creating intuitive grids to offer more products and significantly improve the dimension of time and monetary value of our clients.”
Dinesh Thakkar
opening
“We have improved our overall SLA to 99.8% and with further improvements through the year, we will be hitting four nines, 99.99% within the coming year.”
Dinesh Thakkar
opening
“First impression of this will be available in the initial version of the super app.”
Dinesh Thakkar
opening
“We will be soon ready to deliver the first look in this quarter.”
Dinesh Thakkar
opening
“The release candidate will be available across all three platforms, Android, iOS, and web.”
Dinesh Thakkar
opening
“Since this is a completely new experience for Indian FinTech consumer, we will be deliberate about the dialup experience of all the clients.”
Dinesh Thakkar
opening
“Vineet will be explaining the details during his opening remarks, this upfront disclosure is in line with our effort to follow best practices and transparency with all our stakeholders.”
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Risks & concerns — 15 flagged
Pravin Bathe, Chief Legal and Compliance Officer; Subhash Menon, Chief Human Resources Officer; Bhavin Parekh, Head of Operations, Risk and Surveillance; Devender Kumar, Head of Online Revenue, SGA our IR Consultants.
— Hitul Gutka
With significantly reduced return on low-risk asset, equity are strongly emerging as a natural choice of sustainable investments.
— Dinesh Thakkar
Depository income, which contributed 4% to the total gross income, registered a decline of 9% quarter-on-quarter.
— Vineet Agrawal
Income from distribution of third-party products, which accounted for 1% of our gross revenues, also decline by 31% sequentially due to fewer IPOs.
— Vineet Agrawal
See Anshuman, like in retail, nature of this business is such that people who come to buy options, or trade in, I would say, future and option, they tend to have a kind of lower ticket size and, they are very risk averse.
— Dinesh Thakkar
So, using that product, we let customers essentially game out their risk and figure out what is the best option strategy to pursue for their risk appetite at that point in time.
— Dinesh Thakkar
Now beyond this, whether -- how many options are in the money and out of the money, those kind of details we don't really provide, because that's kind of not very relevant to the product offer that we offer, but our whole business is to give platform capabilities to help customers pick the best strategy to maximize their leverage based on their risk appetite.
— Dinesh Thakkar
If you can just compute the revenue in the F&O segment and the number of orders that you give, that number has been on a decline.
— Prayesh Jain
But do you think this will get normalized over the next -- and will not see any further decline or how do you see that happening?
— Prayesh Jain
So that's one of the key bet this year, and then subsequent years, see we firmly believe that our next wave of growth will come from risk and ops .
— Hiten Jain
So I look at the next two years as a start of that journey, where we are going to take a look at our existing risk systems, our existing processes, our existing back office systems, our existing customer experience journeys, and automate, and bring that to the next level.
— Hiten Jain
So in the super app, the entire journey is built around -- it's tuned very much to what our clients' capabilities are, their risk profiles are.
— Prateek Poddar
The incremental are you seeing that pressure on the cost for getting those employees because market is good for the IT side or the engineering candidates.
— Kajal
And this is what will change in the Super-App, because in the Super-App, we have taken a holistic approach, like on the main page itself on the Super-App, you can see your overall portfolio, you can see your asset mix, you can see what's your composition of stocks, bonds, you can see your risk profile, everything in one clean, neat package.
— Pranav Gupta
See, we share a slide of this, on like impact of, market volatility on number of trades now that we are into flat fee broking models.
— Dinesh Thakkar
Q&A — 16 exchanges
Q
Yes. Hi, good morning, sir and thanks for your opportunity. So my question was regarding the nature of -- some of the growth that you have seen in terms of clients as well as orders. So if you could give a breakup of -- what percentage of contracts in options, normally are in long versus short, to give an idea that how much of people maybe in the money and out of the money, because that could decide kind of their persistency in terms of their trading behavior? So that is question number one. And the question number two, is that, based on our algo or recommendations that we give, we have had a
Dinesh Thakkar
Thank you very much. Narayan would you like to take this? Narayan Gangadhar: Dinesh, you can start, I can take it afterwards. Go ahead. Yes. See Anshuman, like in retail, nature of this business is such that people who come to buy options, or trade in, I would say, future and option, they tend to have a kind of lower ticket size and, they are very risk averse. They're not very risk takers. They're not very knowledgeable people do write options. So mostly nature of the business is that they will buy options, and mostly to be somewhere near the strike price and tenure of like duration of this ho
Q
Hi, sir. First of all kudos on the Q4 numbers. So my question would be around your expansion of the talent pool. You said that you have hired employees from Amazon and Ola, but when I check your PPT, the employee base has actually gone down. So if you can just help me with that? Narayan Gangadhar: Yes, great question. So see what we have -- our strategy as we have communicated in the past is in continuing to scale our digital workforce. And as we scale our digital workforce what's happened is that we have changed the composition, the mix of people that we are bringing in the company. See Angel
Kartik Sahni
Yes. Yes. And just one more question that would be around your average revenue per client. So I see that it has been going down and your market share in the active NSE client has going up. So can I assume that these are new to market customers that have been targeted or, I mean, if you can just, help me with this also? Narayan Gangadhar: Yes. So as Dinesh bhai has address this question many times, so I would also just -- I'll just add on to this. This has been addressed in our earnings call also. See what's happening is that we are attracting a lot of new people to the market that is testament
Q
Yes. Hi, team. Congratulations for a great set of numbers. A few questions from my side, firstly, Dinesh bhai, you spoke about the penetration levels in the country has been low, but if I look at the last six months data, the incremental demat accounts that are being opened every month has been declining, increment NSE active clients that are getting added has been declining. So is there anything to read out there as to, are we entering a phase where we possibly take a breather and then possibly in next round of growth we might come through? So first thought would be there. First question will
Vineet Agrawal
Sure. So, Prayesh, what happens is that we've -- historically, as you see, we have been improving our cost to income ratio over the last few quarters ever since we went digital, and that trend is going to continue. Now in some quarters, there might be some higher force, for some like, as I said, about the incremental salaries that we have given in the first -- from April itself. So those things will be there, but by and large, I think there will be -- the cost to income ratio will be improving, as we go along in our digital journey and definitely with the launch of the super app, this is going
Q
Yes. Hi, congratulations on a very good set of numbers. I just had a few questions, what are the steps you're taking to increase the client activation rate? And what is the activation rate now? Because I think the activation rate before was around 38% or 39%, because now that you have added so many clients, the next step would be to activate them, right. Because if markets start falling or there's a downturn, the best way to continue maintaining your gross broking revenues and everything would be, having a higher client activation rate. So what are the steps you guys are taking in that directi
Akshay Ashok
What is the client activation rate now? It was 37%, 38%, right? Narayan Gangadhar: Devender you want to take over? Yes. Hi everyone. Hi. Devender Kumar: Yes. So, we don't disclose our activation ratio as such, but you can take a number of NSE active clients upon to the base, which will be coming over the new client addition is around 40% - 42%, but we don't disclose this number. On the answer that what are the steps that we are taking to increase the actual activation ratio. I think Narayan touched the chord rightly that we have taken a very data science oriented approach. Where we are creatin
Q
Yes. Thank you for giving me the opportunity. So just on your insta trade platform, wanted to understand the number of users that we have got, what is the user base of this? Narayan Gangadhar: Sorry, your -- Yes, insta trade, see, we don't give feature by feature breakdown of our monthly active or daily active users, but it's a pretty substantial portion, a good portion of our active clients. That's all we can say.
Hitesh Gulati
Okay, sure, sir. Sir, just another question on stock options. So sir, if my understanding is correct currently, if the person on settlement date, if the long is in the money he has to take delivery compulsorily, is that understanding correct? Narayan Gangadhar: So, Bhavin, can you answer this. Good morning, everyone, see basically in an option, if there is an in the money option that the customer is holding in case if the margin are sufficient from the customer, we allow the customer to take the delivery, but if the margins aren’t there, there is a margin call done to the customer, then accord
Q
Hi, sir. Thanks for the opportunity and congratulations on the great set of number. My first question was of course, on the active clients, when I see today, our active to total client number is anywhere in the range of 40%, but when I compared it to someone like Zerodha, it is north wards of 60%. So wanted to understand, why the divergence? One and second, what are we doing to drive this active? Because it's a number of trades, which will drive the top line growth for us. So wanted to understand what are we doing on this parameter? Narayan Gangadhar: So, first of all, we can't comment on our
Nilesh Jethani
Got it. And in the new app, the super app is that helping us to drive the activation rate, when it comes for the broking business? Narayan Gangadhar: Yes. So the data is -- because the super app, it's been in the works and now we are getting obviously a lot of early feedback. Yes, the trend is going in that direction, but I need one more quarter worth of data before I can affirmatively answer that question. But right now it's looking like, it's obviously trending up because we have run numerous studies, but as we launch it further and scale further, I'll have a more measured answer for you. Bu
Q
Thanks. So I have a couple of questions. So first is, so I remember Narayan joining the company one year back, was the first work anniversary I think this month itself. And so I remember that, you were quite keen on the super app investment and your work through and it is good to see that it's seeing -- it's coming to -- it's becoming live in beta mode. So I just wanted to understand, so obviously this year was an investment year for your super app and how should we look about the investments next year in this? And earlier, in one of the earlier question you spoke about the incremental costs t
Hiten Jain
Yes. I understand. Just to follow up on that, see one of your aspiration is to become the largest broker, of the country. And today the largest broker has not relied on marketing. He has relied on his product, word of mouth, but you seem to be taking a different journey. So why not let your product speak for itself and why spend marketing dollars? Narayan Gangadhar: That's a fantastic question. And the main reason for that is because now that we have -- this is the first time. If you look at our app site, we have had two different apps. We have Angel BEE, we have had ABMA, and then we have had
Q
Yes, good afternoon, sir. Narayan Gangadhar: Good afternoon.
Ankit Babel
My first question is, now without this super app, you were growing at suppose x percentage.
Q
Am I audible now?
Management
Q
Yes. So sir, now without this Super-App suppose you, people were growing at X percentage with this app coming in. Can that growth go to like 1.2x or 1.3x? If yes, how and if, no, then why this app? Narayan Gangadhar: Yes. so great question. It's a very fundamental question. So thank you for asking. So see, what has happened is that our customer's expectations from the app and from the product have changed. So even if we sit and do nothing, yes, it's true, that our app is our current app is also growing at a pretty phenomenal rate, and we are actually -- in fact, I think we mentioned in the cal
Prabhakar Tiwari
Narayan, can I add something to that? Narayan Gangadhar: Yes. Please Prabhakar go ahead. Yes. Hi, that's a great question. My name is Prabhakar Tiwari, I work as a Chief Growth Officer here. So as Narayan has mentioned, and has been the theme throughout that product will play a huge role. We are a tech product company, and in terms of growth, it will impact both our acquisition funnel and our revenue funnel. In terms of acquisition today, we operate in a certain channel mix. Some other question was regarding, why the competition is kind of growing without marketing dollars and Narayan answered
Q
Yes. Sir just two questions, one is, you seem to suggest that the migration to Super-App is a switch, or going to be phase type migration. Can that be a threat in the sense like, let's say customers take some time for adoption of new customer journeys on the new Super-App. How do you think about that? And ultimately if let's say in a close group, the sample set is quite small relative to what you have as total clients, right. So if the experience is not good, and if you do it as a switch, how do you rectify or how -- because there could be a loss of momentum. So how should we think about that?
Ankit Rastogi
Yes. Thanks, Narayan. Hi, Pratik. Fantastic question there. So, as Narayan mentioned, we've been experimenting with this CUG, closed beta group kind of cohort from last couple of quarters on our Super-App or an incumbent for a Super-App, the release candidate. And firmly we can believe that we have seen a cohort of both, existing customers migrating as well as new customers. So we will continue on that calibrated approach. In fact, it will be quite a measurable rollout. We call it stage measurable rollout where the X percent of the users will get it. We will again repeat we'll measure, their r
Q
Yes, all my questions are answered. Thanks.
Management
Q
Hello. Hi. Congratulations on good set of numbers sir. I just wanted to once understand that we had initially started as a transformation journey, and now that we have seen that the brokerage and the total revenue is 78% around that only but the mix has changed significantly towards the F&O versus cash. So do you think almost 78% is now F&O and cash is just less than 20%. So do you think cash going ahead is going to be very, very insignificant portion of your total revenue and how do you see your revenue mix evolving? Narayan Gangadhar: Yes. See the cash segment is -- first of all, I should sa
Kajal
And what will be the share of algo trading in our overall? Narayan Gangadhar: So right now it's very non significant it's not even material also, because we don't have any particular algo products, if you will. We have our system generated product, which is called ARQ and that is something that, we have built in house. And, that's also not -- that doesn't technically qualify as an algo product. So answer your question, it's a very, it's close to zero at this point, the algo trading. ARQ form significant portion, is ARQ giving you? Narayan Gangadhar: ARQ is a meaningful chunk of people who come
Q
Hi, sir. Good afternoon and congratulations on a great set. Sir, so most of my questions have been answered, just two questions from my side. So, what are the new investors doing and how is their trading intensity, given that now we have people moving back to offices, could we expect these kind of trends in the derivative segment to continue for the industry? Narayan Gangadhar: Yes, so, see, I mean, now people have been going back to work almost six months now. I mean, everybody is -- those dark days of COVID are behind us touchwood. And what we have seen is that in these two or three quarters
Management
Q
Yes. Hi, good afternoon and congratulations on good set of numbers. I have two questions, one is for Narayan sir. So when you talk about the Super-App and how it can be a -- it will be the key driver for taking the revenue trajectory to the next level, just wanted to understand that initially when we are migrating, our existing base to the Super-App, typical given that our revenue large part of the contributor is F&O, which is a flat fee base. How do we engage with customers more? And how do we see the same set of customers do larger amount of trades which will then eventually drive revenue. I
Ankit Rastogi
Yes. So Pranav just to follow up on that. So the fundamentals of Super-App are pretty much like the simplicity, which we are adding, which is bounded by our personalization capability, starting from the homepage, which Narayan mentioned. Even if you are in a F&O trader, probably insta trade will pop up for you earlier. Or based on your history, the recommendations will come in. Similarly, the Super- App is not just on this feature and UI and UX experience. We are building inherent improvement in our availability and reliability of our product, which is much more crucial. Any app has to be much
Q
Thank you everyone for joining us today on this earning call. India is on the path of achieving long term sustainable growth. And this growth will become a reality in an inclusive and proliferated capital market characterized by significant penetration of equity. As highlighted earlier, new age India is gradually understanding the benefit of arbitrage in returns between low risk asset and equities. According to a study done by Deloitte access of smartphone will increase significantly over the next five years. Growth of smartphone in rural India will be 2.4x, that of urban India. These are the
Management
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Speaking time
Moderator
19
Prayesh Jain
8
Akshay Ashok
8
Ankit Babel
8
Dinesh Thakkar
7
Vineet Agrawal
7
Pranav Gupta
7
Prateek Poddar
6
Kajal
5
Kartik Sahni
4
Opening remarks
Hitul Gutka
Good morning, everyone. On behalf of Angel One Limited, I would like to welcome all of you to our Q4 FY2022 earnings call. I am Hitul Gutka Head of Investor Relations at Angel One. Today we have on the call, Mr. Dinesh Thakkar, Chairman Managing Director; Narayan Gangadhar, Chief Executive Officer; Vineet Agrawal, Chief Financial Officer; Jyotiswarup Raiturkar, Chief Technology Officer; Ankit Rastogi, Chief Product Officer; Prabhakar Tiwari, Chief Growth Officer; Ketan Shah, Chief Strategy Officer, Dr. Pravin Bathe, Chief Legal and Compliance Officer; Subhash Menon, Chief Human Resources Officer; Bhavin Parekh, Head of Operations, Risk and Surveillance; Devender Kumar, Head of Online Revenue, SGA our IR Consultants. We have published a detailed investor presentation and issued a press release to the stock exchanges, highlighting our performance for quarter four and for the full year 2022, I hope you had a chance to look at it. With this brief introduction I now invite Dinesh Thakkar to
Dinesh Thakkar
Thank you, Hitul. Good morning, everyone. The recently concluded financial year 2022 have been a landmark year for the broking industry. As of March this year, the country had nearly 90 million demat accounts, representing about 18% of CAGR over the past 20 years despite multiple headwinds on the way. Most of this growth has come over the past five years, during which industry has grown at approximately 30% of CAGR. This has been a result of massive changes in ecosystem, along with significant reforms within the industry, both from regulators, as well as the participants. Leading the macro transformation within the ecosystem have been a completely overhauled internet infrastructure, access to affordable smart and feature phones, lower data charges, rising financial literacy, expanding income levels, the digitization of various services, and the burgeoning desire from the younger generation to own equities as an asset class. The emergence of FinTech players, and the dynamic changes they
Vineet Agrawal
Thank you, Narayan. Good morning, everyone. I will take you through the financial snapshot for the quarter gone by. As mentioned by Dinesh bhai and Narayan earlier, Angel continued to deliver a remarkable performance on all operating parameters for yet another quarter, which also translated into strong financial results. Coming straight to the financial performance, quarter four of financial year 2022 has been our historic best. Our gross revenues increased by nearly 13% quarter-on-quarter to INR 6.9 billion. Key drivers of the growth of gross revenues were the gross broking revenue grew by approximately 15% quarter-on-quarter to INR 4.8 billion, this accounted for approximately 69% of our gross revenues. Interest income, which includes interest on our client funding book and interest earned from deposits with exchanges, grew by approximately 8% quarter-on-quarter to INR 1 billion. This accounted for 16% of our gross revenues. The ancillary transaction income, which is linked to the tu
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