After surging 5X in 2 years, this fintech multibagger primed for another up to 60% jump

The company recently said gross client acquisition for May was 4.7 crore, a 10.2 per cent YoY growth, indicating continued growth momentum. Thanks to this, in the last one year, it has more than doubled its user base to 1.01 crore. The company’s funding book, and orders processed by it have also seen significant jump even as the market has been choppy, making trading riskier.

Buoyed by these numbers, and increasing financialisation, analysts see up to 60 per cent upside potential in the stock in the next 12 months.

Prayesh Jain, Research Analyst at , said, Angel One is a perfect play on financialisation of savings and digitisation. He expects the company to record 23 per cent revenue CAGR over FY22-23. The analyst said he expects 23 per cent PAT CAGR over FY22-24 and a RoE of 39.5 per cent in FY24.

“The EBITDA margin is expected to remain steady at 50 per cent as the company has guided at sustained investments in technology and marketing, with a focus on acquiring more customers and improving its activation rates,” he said.

In the fourth quarter, Angel One said its gross revenue grew 64 per cent year-on-year. Profit from continuing operations grew at 101 per cent. EBITDA margin (as per cent of net Income) also expanded to 50.8 per cent in FY22, it said.

Though, in May, the stock saw heavy selling along with the entire market. At Rs 1,450 per share, it is trading down about 28 per cent from all-time high levels of Rs 2,022 that it hit in April.

“Currently the stock trades at 13x FY24E P/E, which is attractive considering Angel One’s strong earnings growth profile. We maintain our Buy rating on the stock with a one-year TP of Rs 2,300 (premised on 20x FY24E EPS),” said Jain.

Securities in its post earnings commentary had said given the flat-fee model, Angel One is one of the best plays on the secular growth story in Indian capital markets and its highest conviction ‘BUY’.

“We raise our FY22/23E earnings estimates by 13/23% based on management’s strong commentary about targeted client additions in FY23E/24E, but trim our target multiple to 19x (from 20.5x) to account for higher costs of capital,” Sahej Mittal of HDFC Securities said.

He set an increased target price of Rs 2,050 (19x Sep-23 EPS).

Analysts noted that all eyes will be on its super app launch now. The company management stated that the super app will be launched in a phased manner and is currently being tested. It is aimed at improving client journeys to decrease the bounce rate and offer clients investment products on a single platform.

Hem Securities said demand for financial products is likely to rise, particularly in Tier II and III cities as financial literacy, cell phone penetration, increased awareness, and the creation of Jan Dhan bank accounts increase, which makes Angel One best suited to benefit from the trend.

The broker rated the company at 21.7x FY23 EPS to arrive at the target of Rs 1,945.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times.)