Angel One Share Price Target Revised to Rs 2,800 by Motilal Oswal

Motilal Oswal has reiterated a BUY rating on Angel One Ltd., despite recent headwinds in customer acquisition costs and a sequential dip in earnings. The firm has revised its price target to Rs 2,800, reflecting a potential 19% upside from the current market price of Rs 2,356. While Q4 FY25 results were weaker than expected due to F&O regulations and muted market activity, management remains optimistic about a rebound in FY26, with normalized margins and steady growth from digital investments. Revised earnings estimates and strategic clarity underpin the brokerage’s confidence in the long-term growth outlook for Angel One.

Muted Q4 Results Reflect Regulatory Drag and Weak Sentiment

Angel One reported Q4 FY25 total income of Rs 8.3 billion, down 16% quarter-on-quarter and broadly in line with estimates. The decline was attributed to new F&O regulations and subdued market activity. On a year-on-year basis, however, revenue rose 24% to Rs 41.3 billion for FY25.

Profit after tax (PAT) fell 38% QoQ to Rs 1.7 billion, missing expectations by 13%. The sequential earnings compression reflects operational strain, primarily from customer acquisition campaigns and seasonal advertising costs, including Rs 344 million linked to IPL promotions.

Higher Customer Acquisition Costs Hit Margins

Although total operating expenses appeared flat on the surface, excluding non-recurring cost reversals of Rs 640 million in variable pay, the actual expenditure saw a significant uptick. The increase is tied to a more aggressive client onboarding strategy, an essential part of Angel One’s expansion in retail broking and allied services.

The company's cost-to-income (C/I) ratio rose to 58.9% in FY25 and is expected to stay elevated in the near term. Nevertheless, management anticipates an operating margin recovery to the 40–45% range by Q4 FY26, assuming normalizing F&O activity.

Key Metrics and Financial Ratios: FY25 Snapshot

Client Metrics: Order Decline, MTF Flat, Distribution Slips

Angel One saw a 22% drop in total orders for the quarter, sliding to 327 million. The average Margin Trade Facility (MTF) book remained stable at Rs 40.3 billion, suggesting subdued risk appetite among clients. However, loan distribution volume fell to Rs 1 billion from Rs 2.4 billion in the previous quarter, hinting at reduced traction in the fintech vertical.

Despite these declines, the March and April data indicate a rebound in activity, which the management believes will help revive margins and topline growth.

Revised EPS and Valuation Adjustments

Motilal Oswal has cut its EPS projections by 15% for FY26 and 7% for FY27 to reflect moderated expectations in MTF growth and sustained elevated costs. However, the brokerage remains confident in the company’s long-term strategy and technological edge.

The new target price of Rs 2,800 is based on an 18x multiple of FY27 estimated earnings, representing a healthy upside from current levels. The long-term investment thesis hinges on digital innovation, operating leverage, and expanding product lines.

Ownership and Market Capitalization Overview

Current Market Price (CMP): Rs 2,356

Market Capitalization: Rs 212.8 billion (approx. USD 2.5 billion)

52-week Range: Rs 3,503 (High) / Rs 1,941 (Low)

Shareholding as of March 2025:

Promoters: 35.6%

Foreign Institutional Investors (FIIs): 13.1%

Domestic Institutions (DIIs): 14.3%

Public & Others: 37.1%

Analyst View: Near-Term Caution, Long-Term Confidence

Motilal Oswal believes the regulatory impact on F&O activity, which contributed to the quarterly setback, is transient. The broader strategic view favors Angel One’s scalable model and digital agility. Analysts expect the stock to re-rate once earnings visibility improves and costs normalize.

In particular, initiatives around new business lines and deeper market penetration in Tier 2/3 cities are likely to drive structural growth. The continued focus on data analytics and automation gives the company a long-term technological edge over traditional brokerages.

Conclusion: Investment Perspective

Angel One is navigating a transitional phase. The near-term profitability pressure from regulatory headwinds and high acquisition costs is real, but not permanent. Motilal Oswal’s BUY rating and revised price target of Rs 2,800 underscore confidence in the company’s resilient business model, cost-control roadmap, and leadership in digital broking.

With a RoE of 27.1% and a forward P/E of 15.6x for FY27, Angel One presents a balanced risk-reward opportunity for long-term investors willing to ride through short-term volatility.