Macquarie Predicts Low Growth, Market Share Loss for Angel One

Macquarie’s Cautious Outlook on Angel One: Growth Challenges Ahead

Macquarie’s analysis highlights potential hurdles for Angel One, emphasizing the need for strategic adjustments in a competitive landscape.

Market Performance and Share Price Reaction

In Thursday’s trading session, Angel One’s shares fell by 3% to ₹290 on the Bombay Stock Exchange (BSE), coinciding with a broader market decline reflected in the benchmark indices. Despite this recent dip, the stock has shown resilience, remaining 23% higher year-to-date. Macquarie has set a target price of ₹285, indicating limited upside potential from current levels.

Growth Challenges Identified by Macquarie

Macquarie’s analysis points to several factors contributing to Angel One’s anticipated growth challenges. The brokerage notes that while the company has successfully transitioned to a “phygital” model—integrating physical and digital services—the growth trajectory is likely to face headwinds. The share of active clients on the National Stock Exchange (NSE) has plateaued at 14.8% for FY26, and the company has lost approximately 120,000 active users in the first half of the calendar year.

As a result, Macquarie anticipates further market share losses in the transactions business, which is critical as it accounted for 60% of FY26 revenue. The brokerage’s forecast of a 10% compound annual growth rate (CAGR) for FY26-30 falls short of the estimated industry total addressable market (TAM) CAGR of 17-18%, highlighting the competitive pressures facing Angel One.

Profitability Concerns and Margin Analysis

Macquarie also raises concerns about Angel One’s profitability, noting that it operates with lower margins compared to its peers in the Indian capital markets. The brokerage estimates that client account fixed deposit (FD) interest income constituted about 34% of FY26 EBITDA, a stark contrast to the 13% contribution from market leader Groww. This reliance on FD income suggests that the core profitability of Angel One may be weaker than reported margins indicate.

Excluding the FD float income, the implied core business EBITDA margin is closer to 20%, significantly lower than the reported margin of 26.9%. This discrepancy raises questions about the sustainability of earnings quality and the potential for future growth.

Potential Catalysts for Recovery

Despite the challenges outlined, Macquarie identifies four key factors that could potentially reverse the current trend for Angel One: the launch of large initial public offerings (IPOs) that could reignite investor interest, market share gains through strategic initiatives, successful new product launches, and a resurgence of foreign portfolio investment in India. These factors could help stabilize the company’s market position and enhance growth prospects.

Key Highlights

• Macquarie maintains a ‘neutral’ rating on Angel One amid concerns over market share loss.
• The stock fell 3% to ₹290, but remains 23% higher year-to-date.
• Active client share on NSE has plateaued, with a loss of ~120,000 users in H1CY26.
• Profitability concerns arise from lower margins compared to competitors.
• Potential catalysts for recovery include large IPOs and renewed foreign investment.

Investor Note: Investors should remain cautious regarding Angel One’s growth trajectory, considering the challenges highlighted by Macquarie. Monitoring the company’s strategic responses and market developments will be crucial in assessing future performance.