Angel One share price plunges over 7% after NSE bars it from onboarding new APs

Angel One share price declined over 7% in early trade on Monday after the National Stock Exchange of India barred the brokerage firm from onboarding new Authorised Persons (APs) for a period of six months. The stock fell as much as 7.17% to an intraday low of ₹1,585.00 apiece on the BSE.

In an order dated July 14, the Member and Core Settlement Guarantee Fund Committee of the National Stock Exchange of India Ltd prohibited Angel One broking from onboarding new Authorised Person (APs) for a period of six months.

The order comes after the broking firm’s alleged failure to monitor the operations of its APs, thereby resulting in alleged violation of the Capital Market Segment Regulations and Futures and Options Segment Regulations of the Exchange.

The exchange has also slapped a monetary penalty of ₹1.67 crore on the brokerage house.

NSE has further directed Angel One to conduct inspection of all its APs and submit a report within six months. 

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However, Angel One said the order does not affect the existing business or the activities of the APs affiliated with the company. 

“The Company is evaluating various options available including filing an appeal against the Order. The Company has always strived to and carried out its business in compliance with extant laws and regulations in letter and spirit,” Angel One said.

Authorised persons are the market intermediaries acting as the contact point between the investors and the stockbrokers. APs account for 21% of Angel One’s net broking revenue, while contributing around 25% to the new customer acquisitions.

Since Q2FY21, the broking firm has cancelled licenses for 270 APs, with 83 in Q1FY24 itself. 

In the Q1FY24 management call, the company had highlighted its strategy to increase focus on AP network for scaling the business.

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As per the management, while APs will not be empaneled for broking, the company can still empanel new APs for distribution of products. Incremental growth could be a challenge, especially customer acquisition. However, its existing battery of 21,000+ APs will continue to generate revenue and contribute to customer additions.

During the April-June 2023 quarter, Angel One reported a 21.6% YoY rise in its consolidated net profit to ₹220.8 crore.

The company’s revenue for the quarter grew by 18.4% YoY to ₹807.5 crore. EBITDA increased 20.2% to ₹320.3 crore, while  margin expanded by 60 basis points to 39.7%.

Angel One also surpassed the 15 million clients and achieved its highest ever market share across retail overall equity turnover and NSE active clients.

According to Motilal Oswal Financial Services, Angel One is a perfect play on the financialization of savings and digitization, while its Q1FY24 performance was weaker than estimates. 

“However, since then the traction in volumes and overall activity has picked up momentum. The management continues to invest in technology to strengthen its position. We have cut our FY24/FY25 earnings estimates by 5.5%/3.8% to factor in some reduction in the number of F&O orders, leading to lower broking income from the derivative segment. We reiterate our Buy rating on the stock with a revised TP of ₹2,050,” Motilal Oswal said.

At 10:15 am, the shares of Angel One were trading 5.13% lower at ₹1,619.90 apeice on the BSE.

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