Angel One recovers as broader market shows recovery; here is another trigger

Shares of Angel One, which have lost substantially amid broader market weakness and are down over 19 per cent in the one month, are showing some resilience in trade on Thursday (March 14, 2024).
The partial recovery in the broader markets can be one trigger for the run-up in the discount broker’s stock to the extent of 10.58 per cent to the day’s high of Rs 2,687.5. At around 1:03 pm, shares of the brokerage firm held strong at Rs 2643.75, up 8.78 per cent, or Rs 213.35 per share on BSE.

Another likely trigger supporting the stock’s price is a Motilal Oswal report, which highlights that the company managed to increase its clientele by 5.2 per cent month-on-month, only after Groww, which recorded the steepest increase in client onboarding during the month ended February.

Also, the report pointed out that the company’s market share remains at 14.9 per cent, suggesting that Angel One ranks as the third-leading brokerage in terms of market share as of February 2024.

Furthermore, on a year-on-year basis, the company’s active clients grew by a sharp 60.9 per cent to 21.4 million compared to 13.1 million as of February 2023.

Angel One has been a multibagger stock with a return of 141 per cent in the the last one year.

Nevertheless, the broader market weakness interrupted its gains, and the stock has plunged a sharp 27 per cent on a year-to-date basis.

Earlier, HDFC Securities, in its report dated January 19, 2024, gave an 'add' call on the stock with a target of Rs 3,510.

The brokerage said Angel One’s ability to prioritise speed over efficiency offers the franchise a potent “first-scaler advantage”, however, this needs to be weighed up against return on invested capital. Angel One’s moats are built on a near-perfected digital-native acquisition engine, positive unit economics (albeit diminishing on a marginal basis), and qualitative factors that are difficult to replicate, it added.

HDFC Securities valued Angel One at 20x Sep-25 AEPS (0.9x PEG over FY23-26E) for its potent acquisition funnel and its relatively secular business model.

Technical view

Avdhut Bagkar, Derivatives & Technical Analyst, StoxBox said that shares of Angel One display support at its 200-simple moving average (SMA) set at 2394, as per the daily chart. Moreover, the strength indicator, Relative Strength Index (RSI) has risen over the oversold territory, implying a short term reversal in trend. The stock must exhibit sustainability over 2700 mark, to embark on the fresh upside that seems to face hurdle at 3000 mark. 

"A definitive close beneath the 200-SMA could assist bears to seize control, leading a medium-term downside to 1800 level," the analyst added.