Angel One Stock Price Falling Due to Poor Q3 Results and SEBI’s F&O Curbs

Why is Angel One Stock Price Falling Today? One Big Worry is…

Angel One Stock Faces a 7% Drop Amidst Quarterly Disappointing Results and SEBI F&O Curbs

Angel One stock price has seen a significant decline today, January 14, 2025, with shares plummeting nearly 7% to an intra-day low of Rs 2,280. The drop in stock price is largely attributed to several factors, including the company poor financial performance in the third quarter (Q3 FY25), especially a major fall in EBITDA margins, along with external market pressures like regulatory changes introduced by the Securities and Exchange Board of India (SEBI).

The Core Issue: Declining EBITDA Margins

The major trigger for Angel One falling stock price is its disappointing quarterly earnings, which revealed a sharp dip in EBITDA margins. Angel One EBITDA margin decreased by 500 basis points, from 44.4% in the previous quarter to just 39.3%. This reflects a 5% decline, signaling a deterioration in operational efficiency. Investors had expected a better performance, and the dip in margins raised concerns about the company future earnings capacity, contributing to the sharp drop in its stock price.

In addition to this, Angel One operating profit (EBITDA) fell 26% sequentially, dropping to Rs 496 crore in Q3 FY25, a concerning trend for investors watching the stock. This operational shortfall has made investors jittery about the company ability to maintain consistent growth amidst a challenging environment.

Net Profit and Revenue Drop in Q3 FY25

Despite showing a modest rise in net profit compared to last year, with an 8.13% increase from Q3 FY24 to Rs 281 crore, Angel One profit still declined by 34% from the previous quarter. This sequential drop is worrisome, as it suggests the company is facing growing challenges in a highly competitive stock broking sector.

Moreover, the company revenue for the third quarter of FY25 stood at Rs 1,262 crore, down 17% from the previous quarter, signaling an alarming reduction in its business volume. The decline in both net profit and revenue shows that the company is struggling to keep up with the fast-paced changes in the financial markets.

Impact of SEBI New F&O Regulations

A significant external factor contributing to the fall in Angel One stock price is the new set of regulations introduced by the Securities and Exchange Board of India (SEBI). The market watchdog implemented stricter rules to curb retail investors’ participation in the Futures and Options (F&O) segment, a market that Angel One is heavily involved in.

These measures include a higher minimum contract size, reduced weekly expiries, and the discontinuation of several popular contracts. As Angel One derives substantial business from retail investors in the F&O market, the recent SEBI regulations have resulted in lower participation, negatively affecting the company business model and subsequently, its stock price.

Dividend Announcement: A Positive Move Amidst Challenges

To address investor concerns and mitigate some of the damage caused by the recent disappointing performance, Angel One declared an interim dividend of Rs 11 per equity share. This amounts to Rs 99.30 crore, representing 35.3% of the company consolidated net profit for Q3 FY25. While this move may appease investors in the short term, especially those looking for dividend income, it remains to be seen whether it will be enough to offset the long-term concerns raised by the company falling margins and profits.

The record date for this dividend is January 21, 2025, giving investors some time to react before the payment is made.

Angel One Stock Performance: A Broader Outlook

Angel One stock has underperformed in recent weeks, with a significant drop of 12.5% in the last five trading sessions alone. Over the past month, the stock has shed nearly 27%, signaling mounting investor frustration. Furthermore, year-to-date, Angel One has lost over 20% of its value, continuing a broader trend of poor stock performance.

In comparison, the Nifty 50 index, a key benchmark for the Indian stock market, has also faced a downturn, though it is not as severe as Angel One. The Nifty has fallen by 2% over the past five days, 6% in the last month, and 5.75% over the past six months. However, the broader index has gained 4.9% over the last year, which highlights the magnitude of Angel One recent struggles.

What’s Next for Angel One? Will the Stock Recover?

Looking ahead, Angel One faces several challenges. The dip in EBITDA margins and the continued market uncertainty due to SEBI F&O curbs mean that the company will need to make significant adjustments to its business model to stay competitive. In the meantime, the interim dividend may offer some short-term relief to shareholders, but the stock long-term performance will largely depend on how the company adapts to the evolving financial landscape.

Additionally, investors will be closely monitoring the company future quarterly results to gauge whether the current downward trend in profits and margins can be reversed. If Angel One fails to regain profitability or adjust to the changing market dynamics, its stock may continue to face significant downward pressure.

Conclusion: Is Angel One a Good Investment Right Now?

Given the current situation, Angel One stock price appears to be under considerable pressure due to a combination of internal operational challenges and external market factors. The company falling EBITDA margins and the impact of SEBI regulatory changes in the F&O segment have made investors cautious. While the interim dividend announcement may offer temporary relief, it remains uncertain whether Angel One can recover in the short term.

Investors looking to buy Angel One shares should carefully weigh the risks associated with the company current performance and consider the broader regulatory environment in India stock broking sector. For now, caution seems to be the key.

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