The Mumbai-headquartered discount broker, with a market capitalisation of ₹21,666 crores, has witnessed its stock price decline 24.11% over the past year, significantly underperforming the broader market. Trading at ₹2,445.30 as of 15 October 2025, the stock reflects growing investor concerns about the sustainability of the company's growth trajectory amid challenging market conditions and increased competitive pressures in the retail broking space.
The company's revenue from operations stood at ₹1,201.76 crores in Q2 FY26, marking a 20.66% year-on-year decline from ₹1,514.71 crores in the corresponding quarter last year. This represents the third consecutive quarter of year-on-year revenue decline, highlighting the structural challenges facing the business model as trading volumes moderate from the pandemic-era highs.
Financial Performance: Margin Compression Amplifies Profit Pressure
Angel One's financial performance in Q2 FY26 reveals troubling trends across multiple metrics. The company's operating profit margin (excluding other income) contracted sharply to 34.57% from 44.35% in Q2 FY25, representing a decline of 978 basis points year-on-year. The PAT margin witnessed an even steeper compression, falling to 17.62% from 27.95% in the year-ago quarter, a deterioration of 1,033 basis points.
The sequential improvement from Q1 FY26 provides some relief, with margins recovering from the trough witnessed in the June quarter. However, the year-on-year comparison remains deeply concerning, indicating that the company is struggling to maintain its profitability levels as trading activity normalises post-pandemic.
Employee costs surged to ₹274.47 crores in Q2 FY26, up 19.21% year-on-year from ₹230.24 crores, reflecting the company's continued investment in talent acquisition and retention. Interest expenses rose sharply to ₹93.20 crores from ₹75.41 crores in Q2 FY25, representing a 23.59% increase as the company's borrowing costs escalated in line with higher debt levels to fund margin trading facilities for clients.
| Quarter | Revenue (₹ Cr) | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|
| Sep'25 | 1,201.76 | 211.73 | 34.57% | 17.62% |
| Jun'25 | 1,140.53 | 114.47 | 24.08% | 10.04% |
| Mar'25 | 1,056.01 | 174.52 | 32.45% | 16.53% |
| Dec'24 | 1,262.21 | 281.47 | 39.29% | 22.30% |
| Sep'24 | 1,514.71 | 423.37 | 44.35% | 27.95% |
| Jun'24 | 1,405.45 | 292.73 | 33.47% | 20.83% |
| Mar'24 | 1,357.28 | 339.94 | 39.04% | 25.05% |
| Dec'23 | 1,059.05 | 260.33 | 37.58% | 24.58% |
Operational Challenges: Moderating Trading Volumes Hit Top Line
The primary driver of Angel One's weakening performance has been the moderation in retail trading activity across Indian equity markets. The company, which thrived during the pandemic-driven retail trading boom of 2020-2023, is now facing headwinds as trading volumes normalise and competition intensifies in the discount broking space.
⚠️ Key Concern: Declining Revenue Momentum
Angel One has witnessed three consecutive quarters of year-on-year revenue decline, with Q2 FY26 revenue falling 20.66% YoY. This trend raises questions about the company's ability to sustain growth in a maturing retail broking market where price competition remains fierce and customer acquisition costs are rising.
The company's return on equity (ROE), whilst still respectable at 20.85% for Q2 FY26, has declined significantly from its five-year average of 34.63%. This compression in ROE reflects both the declining profitability and the substantial capital base that has been built up over the past few years through retained earnings. The company's book value per share stands at ₹622.57, with the stock trading at a price-to-book ratio of 3.95 times.
Angel One's balance sheet reveals total shareholder funds of ₹5,621.40 crores as of March 2025, up from ₹3,038.60 crores a year earlier, reflecting robust capital accumulation. However, the company operates with a debt-to-equity ratio of 0.65, indicating moderate leverage primarily deployed to fund margin trading facilities for clients. The company maintains a net cash position of negative ₹8,623 crores when considering client-related receivables and payables.
Industry Context: Discount Broking Model Under Pressure
The discount broking industry in India has witnessed dramatic growth over the past five years, with Angel One emerging as one of the key beneficiaries alongside players like Zerodha and Upstox. However, the industry is now grappling with several structural challenges that are impacting growth trajectories across the board.
Market volatility has reduced retail trading activity, particularly in the derivatives segment which contributes significantly to broking revenues. The Securities and Exchange Board of India's (SEBI) regulatory interventions aimed at protecting retail investors, including restrictions on certain derivative products and enhanced margin requirements, have further dampened trading volumes. Additionally, the proliferation of competitors offering zero-brokerage trading in cash segments has intensified price competition.
Market Dynamics Shifting
The retail broking industry is transitioning from a high-growth, volume-driven phase to a more mature, margin-focused environment. Companies are now competing on technology, customer service, and value-added offerings rather than pure price competition. Angel One's ability to navigate this transition whilst maintaining profitability will be critical to its long-term success.
Peer Comparison: Valuation Discount Reflects Concerns
Angel One's valuation metrics reflect the market's cautious stance on the company's near-term prospects. At a trailing twelve-month P/E ratio of 22.32 times, the stock trades at a significant discount to several peers in the financial services technology space, though direct comparisons are complicated by differences in business models.
| Company | P/E (TTM) | P/BV | ROE (%) | Dividend Yield (%) |
|---|---|---|---|---|
| Angel One | 22.32 | 3.95 | 20.85 | 1.96 |
| NSDL | 67.22 | 11.50 | 17.11 | 0.17 |
| KFin Technologies | 55.99 | 13.59 | 23.63 | 0.00 |
| Anand Rathi Wealth | 76.27 | 3.24 | 4.25 | 0.11 |
| CAMS Services | 39.83 | 16.77 | 42.04 | 1.91 |
Angel One's P/E multiple of 22.32 times appears reasonable when compared to the peer average of approximately 60 times, reflecting the market's concerns about growth sustainability. The company's P/BV ratio of 3.95 times is justified by its ROE of 20.85%, which, whilst declining, remains healthy. The dividend yield of 1.96% provides some income support to investors during this challenging phase.
Valuation Analysis: Fair Value Reflects Uncertain Outlook
Angel One's current valuation of ₹2,445.30 per share reflects a "Fair" rating according to proprietary valuation models, having been downgraded from "Expensive" in August 2025. The stock trades 30.19% below its 52-week high of ₹3,502.60, whilst sitting 25.92% above its 52-week low of ₹1,942.00.
The company's enterprise value-to-EBITDA multiple of 7.73 times and EV-to-sales multiple of 2.77 times suggest reasonable valuations relative to near-term earnings expectations. However, these metrics are predicated on the assumption that the company can stabilise its revenue trajectory and prevent further margin erosion.
The stock's technical indicators present a mixed picture. The stock is currently in a "Mildly Bearish" trend, having changed from a "Bearish" trend on 13 October 2025. The stock trades above its 5-day, 20-day, and 50-day moving averages but below its 100-day and 200-day moving averages, suggesting near-term strength but longer-term weakness.
Shareholding Pattern: Institutional Confidence Building
Angel One's shareholding pattern reveals interesting dynamics in institutional investor sentiment. As of June 2025, promoter holding stood at 28.97%, down sharply from 35.55% in March 2025, reflecting a 6.58 percentage point reduction. This decline was primarily due to regulatory compliance requirements rather than a loss of promoter confidence.
| Investor Category | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|
| Promoters | 28.97% | 35.55% | 35.57% | -6.58% |
| Foreign Institutions | 14.66% | 13.05% | 13.81% | +1.61% |
| Mutual Funds | 14.01% | 11.37% | 11.09% | +2.64% |
| Insurance Companies | 0.40% | 0.55% | 0.73% | -0.15% |
| Other DIIs | 2.03% | 2.35% | 2.50% | -0.32% |
| Non-Institutional | 39.94% | 37.11% | 36.30% | +2.83% |
The positive development has been the steady increase in institutional holdings. Foreign institutional investors increased their stake to 14.66% from 13.05% in the previous quarter, whilst mutual fund holdings rose to 14.01% from 11.37%. This suggests that despite near-term challenges, institutional investors see long-term value in the Angel One franchise. The number of FII holders increased to 183 from 172, indicating broadening institutional interest.
Stock Performance: Significant Underperformance Persists
Angel One's stock performance has been decidedly weak over the past year, with the shares declining 24.11% compared to the Sensex's modest 0.96% gain, resulting in a negative alpha of 25.07 percentage points. The underperformance has been particularly acute in year-to-date terms, with the stock down 16.61% against the Sensex's 5.72% gain.
| Period | Angel One Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 10.26% | 1.02% | +9.24% |
| 1 Month | 8.59% | 1.00% | +7.59% |
| 3 Months | -8.54% | 0.04% | -8.58% |
| 6 Months | 5.26% | 7.65% | -2.39% |
| YTD | -16.61% | 5.72% | -22.33% |
| 1 Year | -24.11% | 0.96% | -25.07% |
| 3 Years | 48.32% | 42.62% | +5.70% |
| 5 Years | 851.11% | 107.93% | +743.18% |
The recent one-week and one-month performance has shown encouraging signs, with the stock rallying 10.26% over the past week and 8.59% over the past month, significantly outperforming the broader market. However, this bounce appears to be a technical recovery from oversold levels rather than a fundamental shift in sentiment.
The stock's beta of 1.35 indicates high volatility relative to the broader market, with the shares typically moving 35% more than the Sensex in either direction. This high-beta characteristic makes Angel One suitable primarily for risk-tolerant investors with a long-term investment horizon.
"Angel One's transition from a high-growth story to a mature business model is proving more challenging than anticipated, with margin pressures and competitive dynamics testing the company's resilience."
Investment Thesis: Quality Company Facing Cyclical Headwinds
Angel One's investment case rests on several pillars. The company has demonstrated exceptional long-term fundamental strength, with a five-year sales CAGR of 44.78% and EBIT growth of 50.85%. The average ROE of 34.63% over the past five years places the company among the elite performers in Indian financial services.
However, the near-term picture is considerably less attractive. The company's financial trend has turned "Negative" for two consecutive quarters, with both revenue and profitability declining. The technical trend remains "Mildly Bearish", reflecting ongoing selling pressure. The valuation, whilst "Fair", offers limited margin of safety given the uncertain growth outlook.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Strong Historical Growth: Five-year sales CAGR of 44.78% demonstrates successful business model execution during the retail trading boom
- Robust ROE Profile: Average ROE of 34.63% over five years indicates efficient capital deployment and strong profitability
- Solid Balance Sheet: Net cash position and moderate leverage provide financial flexibility
- Rising Institutional Interest: FII and mutual fund holdings increased in recent quarters, signalling long-term confidence
- Technology Leadership: Strong digital platform and mobile app capabilities position company well for digital-first customers
- Market Position: Established brand in discount broking space with significant customer base
⚠ KEY CONCERNS
- Revenue Decline: Three consecutive quarters of YoY revenue decline raises questions about growth sustainability
- Margin Compression: PAT margin declined 1,033 bps YoY to 17.62%, indicating profitability pressure
- Moderating Trading Volumes: Normalisation of retail trading activity post-pandemic impacting top-line growth
- Intense Competition: Zero-brokerage models and new entrants increasing competitive pressures
- Regulatory Risks: SEBI interventions in derivatives segment could further impact revenues
- High Beta: Stock volatility of 44.67% makes it unsuitable for conservative investors
- Declining ROE: Current ROE of 20.85% well below five-year average of 34.63%
Outlook: What Lies Ahead
POSITIVE CATALYSTS
- Market volatility pickup driving higher trading volumes
- Successful diversification into wealth management and advisory services
- Technology innovations enhancing customer engagement and retention
- Stabilisation of competitive dynamics in discount broking space
RED FLAGS TO MONITOR
- Further revenue declines in upcoming quarters
- Continued margin pressure below 20% PAT margin levels
- Additional regulatory restrictions on retail derivatives trading
- Market share losses to competitors offering zero-brokerage models
The Verdict: Quality Franchise at Inflection Point
Score: 38/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst Angel One remains a quality franchise with strong long-term fundamentals, the near-term outlook is clouded by declining revenues, margin pressures, and uncertain trading volume trends. The stock's negative momentum and weak financial trend suggest further downside risk. Wait for clear signs of revenue stabilisation and margin recovery before considering entry.
For Existing Holders: Consider reducing exposure on any further rallies towards ₹2,600-2,700 levels. The company's transition from high-growth to mature business model is proving more challenging than anticipated. Whilst the long-term story remains intact, the near-term headwinds could persist for several quarters. Maintain only core holding if conviction in long-term prospects remains strong.
Fair Value Estimate: ₹2,200-2,400 (10% downside to 2% downside from current levels)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
