Angel One Limited

8%

g, everyone. Q2 FY'23 has been a strong quarter for Indian capital markets, with indices returning 8% and 16% for NIFTY and NIFTY Midcap, respectively, supported by healthy volumes in cash, F&O and c

16%

yone. Q2 FY'23 has been a strong quarter for Indian capital markets, with indices returning 8% and 16% for NIFTY and NIFTY Midcap, respectively, supported by healthy volumes in cash, F&O and commodity

4%

d by healthy volumes in cash, F&O and commodity segments. This is contrary to negative returns of 4% to 21% delivered by some of the developed and developing markets. Global investment climate has be

21%

ealthy volumes in cash, F&O and commodity segments. This is contrary to negative returns of 4% to 21% delivered by some of the developed and developing markets. Global investment climate has been damp

6 million

moderate growth prospects of the country. However, the silver lining is that India added another 6 million-plus demat accounts during the quarter, thus expanding its demat base to approximately 103 millio

103 million

6 million-plus demat accounts during the quarter, thus expanding its demat base to approximately 103 million as of September 2022. We strongly believe we have a strong, long runway ahead of us. This stems fr

435 million

ndia's demographic dividend is largely underrepresented by the current investor base. With nearly 435 million unique PAN card holders as of March 2019, there is enough growth opportunity available. While th

rs,

ecially from Tier 2, 3 and beyond cities of India. Since most of these clients will be first timers, there's a greater responsibility on regulators. Over the last year or so, the regulators have playe

1 million

capital markets to large parts of the society is playing out well as we continue to onboard over 1 million clients per quarter, for 6 consecutive quarters now, with more than 93% coming from Tier 2, 3 and

93%

nue to onboard over 1 million clients per quarter, for 6 consecutive quarters now, with more than 93% coming from Tier 2, 3 and beyond cities. We garnered about 19% share in incremental demat accounts

19%

utive quarters now, with more than 93% coming from Tier 2, 3 and beyond cities. We garnered about 19% share in incremental demat accounts opened in India during Q2 FY'23, thus representing almost 1 ou

11.3%

ising share in incremental accounts led to a steady expansion in the overall demat market share to 11.3% as of September 2022, from 7.5%, 6 quarters back. This demonstrates the superiority of our digital

“As a reminder, I would like to inform you that the company does not provide any operational and financial guidance.”

“Since most of these clients will be first timers, there's a greater responsibility on regulators.”

“There are still some upgrades planned, which will be integrated and rolled out during this current quarter.”

“This will normalize going forward as the older grants complete their tenure and corresponding cost will not be reflected.”

“And Vineet it will be great if you could extend that context and help us understand as to really how the things shaped up when the payout on the first Friday, the previous week happened.”

“Can you just quantify how much expense will be there for FY'24 and '25?”

“And there will be a small percent, maybe 5%, 10% whatever, who are in the self-employed bucket.”

“So no matter what the operating costs, no matter what the overall situation, our goal will be always to grow the top line and maintain this operating margin going forward.”

“And this is what I was explaining earlier that I expect the ARPU to normalize.”

“So on what basis we understand it would be going forward?”

Narayan Gangadhar

20

Vineet Agrawal

10

Gautam C Jain

6

Prayesh Jain

3

Uday Pai

2

Pujan Shah

2

Kajal

2

Moderator

2

Deepak Sonawane

1

Prachi Kodikal

1

Narayan Gangadhar

Good morning, ladies and gentlemen, and welcome to Angel One Limited's Q2 FY'23 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines 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 the conference call, please signal an operator by pressing ‘*’ then ‘0’ on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hitul Gutka. Thank you, and over to you, sir. Good morning, and welcome, everyone. Thank you for joining us today to discuss Angel One's Q2 FY'23 financial and business performance. The recording of today'

Vineet Agrawal

marginally to 13%. Share of commodity and currency segments remained flat at 4% and 1%, respectively. The average revenue per client, which is calculated on the entire client base at the end of the quarter stood at Rs 430 for the quarter. This trended lower, primarily due to a higher share of the new-to-market clients, which were 88% of our gross acquisitions for the quarter. Basis our experience, these clients initially are low revenue accretive, but stabilized in prime time. Despite this, we have been able to maintain our growth and profitability metrics. On a cohort basis, we have seen revenue per client mature as they progress into year 2 and onwards of the wealth creation journey. In contrast to our pre digital model, where year 2 revenue per client were significantly lower than year 1, the same is now more stable. Since we acquired clients at a robust pace over the last 2 years, their share in the net broking revenue continued to dominate at 69% in quarter 2 FY'23. Here, I wish t

Prayesh Jain

With this, I conclude the presentation and open the floor for further discussion. Thank you. The first question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead. Congratulations on great set of numbers. Just a few questions from my side. Firstly, Narayan, could you talk about customer acquisition and the way you are thinking about spending on customer acquisition and what channels that you'll use in this new environment that they are coming in. So firstly, could you talk on that front, as to how do you see this shaping up going ahead? Secondly, we want a deeper explanation on the increase in the financial assets and borrowings from Vineet, if you can give some more clarity as to what happened? And Vineet it will be great if you could extend that context and help us understand as to really how the things shaped up when the payout on the first Friday, the previous week happened. So that would be great if you could explain that? And yes, so that would be the questions

Vineet Agrawal

right, for you guys to a certain extent. So could you give some example what really transpired in this 2 days? Sure. So see, the payout happened on the 7th, as you guys already know, right? And we basically swung into action pretty much that same weekend. We hardened our processes. We hardened our product experiences around the pay-in factor. And because of this hardening and the investment that we made upfront, we saw that we had recovered almost 80% of the capital within the first 3 or 4 business days. So as a result of that, right on the very first day, that is the very first day after the payout, we actually didn't see any loss in our order volume. Of course, we don't share those numbers, but we didn't see pretty much any loss. On the contrary, within 2 days, the order volumes were up, right? So this essentially is a testament to not only our technology prowess in handling this transition fully, because I'm sure you're aware that there were many other institutions with actually thi

Vineet Agrawal

So this money that we borrowed and the FDs that matured over a period of time, we just parked them as cash with the clearing corporations in anticipation of the payout. So most of the FDs were maturing towards the end of the quarter or early in October.

Uday Pai

The next question is from the line of Uday Pai from Investec. Please go ahead. Yes, I wanted to know the impact of the regulation of margin requirement at the client level and not at a company level. What would be the impact of this on the business?