What Angel Broking Expects To Benefit From

Angel Broking Ltd. expects to benefit from growth in smaller cities as stock trading via mobile phones spiked amid increased retail investor participation, and expansion of its digital platform.

Growth is coming from the mobile user segment in tier II and III cities, said Dinesh Thakkar, chairman and managing director at the brokerage, adding the company witnessed a rise in expenses for creating digital infrastructure in the financial year ended March 2019. The size of the digital broking industry is around Rs 22,000 crore, he told BloombergQuint in an interview.

According to Chief Executive Officer Vinay Agarwal, the company has moved away from branch-based models, and is focusing solely on digital modes for business. It has invested in machine learning and artificial intelligence, with services like robo-advisory, he said.

This comes as Angel Broking has launched a three-day initial public offering on Sept. 22. The technology-led provider of broking and advisory services, margin funding, loans against shares and financial products distribution to clients aims to raise almost Rs 600 crore via fresh issue and an offer-for-sale by its promoters, IFC (major investor) and other shareholders.

The maiden offer of the brokerage, which managed Rs 13,254 crore in client assets and over 21.5 lakh operational broking accounts as on June 30, however, received a muted response as it subscribed 0.77 times on the first day of bidding. The category reserved for non-institutional and retail investors subscribed 0.16 and 1.46 times, respectively, as of 5 p.m., according to data released by Axis Capital. Institutional investors placed zero bets.

The public issue will close on Sept. 24.

Here are other key highlights from BloombergQuint’s conversation with Dinesh Thakkar and Vinay Agarwal.

Dinesh Thakkar

• Broking industry in the future will see lots of consolidation among the top 10-15 players.

Vinay Agarwal

• Operating leverage will kick-in with high customer acquisitions as the company has moved towards the flat fee brokerage model.
• Don’t believe in reducing technological costs.

Watch the full interview here: