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Business News/ Markets / Stock Markets/  Angel One: This multibagger stock is down 20% in last six sessions, should you buy now?
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Angel One: This multibagger stock is down 20% in last six sessions, should you buy now?

Angel One shares witness another 5% intraday decline, resulting in a cumulative loss of 20% in share value since the announcement of its Q3FY24 results. Keynote Capitals downgraded Angel One's rating to 'sell' from earlier 'buy'.

Despite the recent steep decline in the stock's value over the past six sessions (including today's trading), it still retains an impressive 138% gain over the last one-year period and an extraordinary 900% gain over the past five years.Premium
Despite the recent steep decline in the stock's value over the past six sessions (including today's trading), it still retains an impressive 138% gain over the last one-year period and an extraordinary 900% gain over the past five years.

Continuing their bearish trajectory, Angel One shares witnessed another 5% intraday decline today, reaching a low of 3,085 per share. This downtrend has persisted since the announcement of its Q3FY24 results on January 15, resulting in a cumulative loss of 20% in share value. 

After the release of the company's financial results, domestic brokerage firms revised down their earnings estimates for Angel One due to escalating operating expenses. 

The company witnessed a notable surge in customer acquisition costs and an uptick in employee expenses, contributing to a 21% year-on-year and 13% quarter-on-quarter decrease in EBITDA. The rise in employee costs can be attributed to the increased headcount, particularly in the asset management business, data and analytics, and technology operations functions.

Also Read: ICICI Bank share price jumps over 5% to 52-week high after Q3 results; should you buy?

The company achieved the highest-ever client addition, welcoming 2.5 million clients in Q3. This success, however, incurred escalated one-time customer acquisition and onboarding costs. Furthermore, heightened expenditures on technology infrastructure, DEMAT charges in alignment with business growth, and an additional quarterly expenditure of 25 million on CSR contributed to the overall increase, said domestic brokerage firm Keynote Capitals.

Finance costs also jumped during the quarter due to increased average borrowings during the period, aligning with the expansion of the client funding book and elevated margin requirements resulting from business growth. Further, the company expects an increase of 400 million in finance costs due to the impact of high borrowings.

Following the company's performance in Q3, Keynote Capitals revised its estimates and lowered its rating from a 'buy' to a 'sell' with a target price of 2,592 apiece.

Also Read: Zee Entertainment share price tanks more than 25%: Mutual funds loose more than 1900 crore in a day

"AOL showcased a strong performance in client additions, while the growth in a number of trades on a QoQ basis has mellowed down. Further, we expect the cost to remain elevated as the company is investing in customer acquisition and employee addition," said the brokerage.

Another brokerage firm, Motilal Oswal also adjusted its FY24, FY25, and FY26 earnings estimates downward by 6.8%, 5.2%, and 3%. This adjustment accounts for increased operating costs, specifically employee and administrative expenses, driven by the ongoing momentum in client acquisition and investments in new business ventures.

However, the brokerage retained its 'buy' call on the stock with a target price of 4,000 apiece.

HDFC Securities, on the other hand, said the company remains one of the best core portfolio plays on the secular growth story in Indian capital markets. However, it believes that the Unit economics is plateauing, given early signs of diminishing marginal utility (newly acquired customers). It maintains its 'Add' rating on the stock with a revised target price of 3,510 apiece.

Also Read: Zee share price tanks 30%, erases over 6k crore mcap as Sony calls off merger; brokerages downgrade stock

On the technical front, Riyank Arora, Technical Analyst at Mehta Equities, said," The stock has been moving in a downtrend and testing its crucial support zone of 3075 to 3125. The overall structure continues to look on the positive side, and it appears that the stock should find support here. Upside potential looks likely towards the 3,300 and 3,350 marks, with a stop loss placed slightly below the 3000 mark.

Despite the recent steep decline in the stock's value over the past six sessions (including today's trading), it still retains an impressive 138% gain over the last one-year period and an extraordinary 900% gain over the past five years.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 23 Jan 2024, 01:40 PM IST
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