Angel Broking debuts at 10 pct discount - Is the IPO euphoria fading?

Angel Broking stocks have started trading at Rs 275 at a discount of 10 pct compared to the issue price of 306. The broking house made a low of Rs 257 and is trading at a market cap of Rs 2250 cr.

Angel broking is one of the largest broking houses in India. However, the valuations of this IPO were not attractive to investors because of which it was expected to list at 5-7% discount to the issue price.

The issue price has been fixed at Rs 306 per share, higher end of the band price. The stock price is expected to list at a discount due to muted revenue growth, higher valuations, high competition in the broking industry and muted response to the IPO. Listed competitors for the company are Motilal Oswal Financial Services, Edelweiss Financial Services, Zerodha, JM Financial, IIFL Securities and ICICI Securities.

Zee Business Managing Editor Anil Singhvi has clearly indicated that Angel Broking IPO is expected to list near or below issue-price of Rs 306. The Rs 600 cr public issue was subscribed 3.94 times during September 22-24. The Revenue has remained muted for this company over years despite a robust client base. At the issue price, Angel Broking would command a valuation of 26.84 times FY20 earnings.

The Rs 600 cr public issue was subscribed 3.94 times during September 22-24.The net proceeds from fresh issue of Rs 300 cr would be utilised for working capital requirements and general corporate purposes, while the offer for sale money of Rs 300 cr less expenses will go to selling shareholders. Company is a technology-led financial services entity providing broking and advisory services, margin funding, loans against shares (through one of the subsidiaries AFPL) and financial products distribution to clients under the brand Angel Broking. Company managed Rs 13,254 cr in client assets and over 21.5 lakh operational broking accounts as of June 2020.

The company provides broking and allied services through

1)     Online and digital platforms

2)     Network of over 11,000 authorised persons as of June 2020.

Angel Broking would be the only listing since the past 3 months which is opening at a 10% discount. All other IPO’s like Rossari Biotech, Mindspace Business Parks REIT, Route Mobile, Happiest Minds Technologies, Chemcon Speciality Chemicals and Computer Age Management Services have listed at premium to the issues price.

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Some analysts believe listing at a discount of Angel IPO indicates these are initial signs of fading of IPO Euphoria. Global news are weak due to President Trumps Covid news with did impact the pricing of the IPO.

by Rahul Kamdar