Please note that this conference is being recorded. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to Mr. Hitul Gutka from Angel One Limited. Thank you, and over to you, sir.
Good morning, and welcome, everyone. Thank you for joining us today to discuss Angel One's Q4 FY 2024 financial and business performance. The recording of today's earnings call and transcript will be uploaded on our website under the Investor Relations section. The financial results, investor presentation and press release are also available on the website. For today's call, Angel One is represented by Dinesh Thakkar, Chairman and Managing Director, Vineet Agrawal, Chief Financial Officer.
We also have the senior leadership team of Angel One, along with SGA, our IR consultants. The leadership team will give us a brief overview of the operational and the financial performance of the quarter gone by, which will be followed by a question and answer session. Please note that there may be certain forward-looking statements made during the call, which must be viewed in aggregate with the risks that the company faces. With this brief introduction, I now invite Dinesh Thakkar for his opening remarks.
Thank you, Hitul. Good morning, everyone. In the financial technology industry, where innovation is the currency of progress, Angel One has stood as a beacon of excellence for three decades. Today, as we gather virtually here, I'm filled with gratitude for the journey we have traversed, the milestones we have achieved, the trust we have garnered among our clients. Our legacy is one of relentless pursuit of excellence, innovation and trust. Through this pursuit, we have established ourselves as a formidable player in India's fintech landscape, where our name resonates as a symbol of reliability and innovation. Our digital outreach has enabled clients located beyond metros and Tier cities to access and consume capital market products. This democratization of financial services has been one of our pillar of growth, and we continue to deepen our roots into untapped opportunities.
As we have reinvested in expanding our client base and offering them a more robust platform, we have witnessed very strong growth. I'm delighted to share that our average daily order has grown 86% between quarter one and quarter four of FY 2024. In that process, achieving the peak orders per day of more than 10 million. This growth is testament to the resonance of our vision and the effectiveness of our performance. With strong growth come the responsibility to ensure adequate capitalization to sustain and fuel our expansion. In this spirit, we recently completed a capital raise of INR 15 billion, which will be primarily used for margin monies with stock exchange and the growth of our MTF book. These efforts underscores our commitment to prudently manage our resources.
We are extremely thrilled and humbled by overwhelming response our fundraise received from both domestic and foreign investors as a testament to the confidence they have in our vision and strategy. To all our investors, both existing and new, I extend my heartfelt gratitude for your invaluable support and belief in our journey. Coming to our operational performance, I'm delighted to share with you that Angel has once again delivered a historic performance during the quarter. We have experienced our highest ever quarterly gross acquisition, expanding our client base to a new high of over 22 million. Furthermore, our client executed over 470 million orders during the quarter. This client surge, coupled with robust activity witnessed on our platform, across our platform, across our product and service offering, we confirm the resilience and the scalability of our systems.
At the heart of our growth story lies an unwavering commitment to client centricity. This ethos has guided us through our digital transformation journeys, enabling us to build a solid roster of clients who not only transact with us but also advocate for us. Each cohort acquired has consistently given us stable revenue every year. Our vintage clients, too, who have been with us for more than five years, continue to contribute very healthy revenues even today. With higher client acquisition year-over-year, their revenue contribution is consistent like the previously acquired cohort. The stability and profitability exhibited by each cohort and the continuous influx of new clients serves as a bedrock for our future growth. Our digital model not only enables us to penetrate deeper into market, but also fosters long-term relationship with a younger demography, driving value creation and client longevity.
Through this digital engagement, clients from every acquired year tend to become active and transact in one or more segments over time. For instance, about 54% of clients acquired in FY 2021 became active over the next four years and continued to engage on our platform across multiple segments.... It is heartening to note that even in respect of clients who commence their journey as a trader, an overwhelming majority of them eventually build long-term equity portfolio, thus realizing the virtues of investing in equity as an asset class. This journey of value enhancement from novice trader to mature investor is extremely encouraging and defines client longevity on our platform, thus ensuring sustained growth in lifetime value of the customer. It also motivates us to offer our clients other value, value-added services and partner with them in their quest for wealth creation.
As we chart the course for the future, our focus remains steadfast to enhance client experience on our platform through superior engagement journeys and product enhancements to create value at every touch point. We continued our focus on further fine-tuning our KYC journey, which is the first point of client interaction with our systems. We undertook development on the super app with the rollout of dedicated sections for option strategies, allowing traders to discover and execute predefined and custom strategies easily. We also released a dedicated option expiry section, which simplifies trading option on expiry days. To encourage creating long-term investing behavior, we enhanced journey for the Cash segment as we introduced Stock Case, featuring a list of popular stocks, most traded stocks on the homepage, a predefined watchlist segmented to some predefined personas.
Dedicated to revolutionize client engagement and experience, our assisted business has been building a dynamic array of products. As a part of development, we are transforming the NXT application, a universal platform for all our channel partners. Key development currently being carried out include intuitive and intelligent features, empowering our channel partners for better lead generation and management. With clear call to action button and high degree of personalization, the platform acts as a personalized communication engine for our channel partners.
In our mutual fund journey, clients can now customize SIP amount and dates, compare up to three mutual funds across all available parameters, and track portfolio growth against indices. These innovations are driving significant growth in SIP adoption, reinforcing our position as the second largest player in incremental registered SIP. This underscores the effectiveness of our super app strategy and the value it delivers to our clients.
Last quarter alone, we registered nearly 1.4 million unique SIP, showcasing our commitment to guiding clients on their long-term investing journey and enhancing engagement on our platform. Efforts continued during the quarter to seamlessly integrate credit and fixed income products into our platform, which is currently undergoing beta testing with select clients. Having crafted the MVP for this offering and initiating rigorous testing to ensure reliability and effectiveness, we expect to scale up the operation over the next few quarters. On the AMC front, we have onboarded the core leadership team, who have been working to get the final approval from the regulator for the swift launch. With respect to our wealth management foray, I'm happy to introduce to you the team led by Srikanth Subramanian as the co-founders of our wealth management business.
Srikanth has extensive experience at Kotak Mahindra Bank in life insurance, private bank, including global wealth management and investment advisory, and more prominently in the wealth tech initiatives at Kotak Cherry. The co-founders offer decades of combined deep domain expertise across the function of wealth business and demonstrate impeccable skills to scale the wealth business with a sharp focus on tech-led models. While we will target the fast-growing segment of UHNI and HNI, we endeavor to progressively democratize this offering to the underrepresented segment in retail through differentiated digital offerings.
During the quarter, we further solidified our management bandwidth with the onboarding of Meenal Maheshwari Shah as our Group General Counsel. With a remarkable career spanning over 14 years, Meenal's expertise extends to working on diverse legal transactions, navigating complex legal landscape, and providing insightful counsel on legal, policy, and regulatory matters.
Prior to joining Angel One, Meenal served as a group legal director and data protection officer at Lemmatree Pte. Ltd. , a subsidiary of Temasek, led the legal counsel function at Essar and Times of India. We have secured the associate partner sponsorship for the coveted Indian Premier League, IPL, for five years starting in 2024. This sponsorship promises us extensive brand visibility through on-ground, digital, and televised media, allowing us to engage with wider audience, particularly in Tier 2 and Tier 3 cities and beyond. Our investments in quarter four, FY 2024, reflects our proactive stance in expanding our team, client base, and technological capabilities to continuously prime our client experience. While these investments may impact short-term margins, they are crucial to our long-term growth and profitability. Let me now take you through some of our operational highlights.
We onboarded about 2.9 million clients within a quarter, starting up the total client base of 22.2 million clients. This serves as a testament to our commitment to operational excellence. Robust client activity drew a 35% sequential increase in total executed orders for the quarter. The ADT on our platform continued to uptrend, growing by 23% quarter-on-quarter to nearly INR 44 trillion. Looking ahead, we anticipate sustained growth requiring increased working capital deployment. Consequently, the board has decided to defer dividend payout for the next few quarters to conserve resources, optimize our balance sheet, and support our growth trajectory. Now, Vineet will walk you through our financial performance before we open the floor to your questions.
Thank you, Dinesh Thakkar. Good morning, everyone. As highlighted by Dinesh Thakkar , quarter four of FY 2024 has been a very strong operational quarter for us, as we achieved our historic best performance yet again, with average daily orders growing by 32.3% sequentially to 7.73 million, taking our aggregate order count higher by 34.5% sequentially to 471 million in quarter four of FY 2024. We clocked our highest ever quarterly gross total revenue at INR 13.6 billion, registering a 28% quarter-on-quarter growth. Gross broking revenue grew by 30% quarter-on-quarter to INR 6.92 billion. Gross broking revenues accounted for 68% of our gross total revenues.
Within this, F&O continues to drive the gross broking revenue, contributing 85% in quarter four of FY 2024, while the share of cash and commodity segments remains stable at 11% and 4% respectively. Since majority of our clients are part of our direct business, their share in the net broking revenues stood at approximately 77%, while the balance 23% was contributed by clients acquired through our assisted business. Our volumes in the cash delivery segment continue to improve. Higher activity in this segment is an important lever for growth of our client funding book, which grew by 9.1% sequentially to average at INR 20.3 billion for the quarter. This led to a corresponding growth in the interest we earned on this book.
The interest earned on client funding, along with the interest earned on deposits with exchanges, led to a 16.6% sequential growth in our total interest income to INR 2.5 billion, thus accounting for about 18% of the total gross revenues for the quarter. The ancillary transaction income linked to the turnover clients do on our platform grew by 34.7% quarter on quarter to approximately INR 1.1 billion, accounting for nearly 8% of our quarter four total gross revenues. Finance cost was higher by about 56% quarter on quarter to INR 556 million in quarter four of FY 2024, due to a combination of a higher average borrowings and higher cost of funds for the period.
Higher borrowings were in line with the growth in client funding book and borrowings availed to fulfill margin obligations with the clearing corporations. The overall finance cost for the year has been within the anticipated increase, as envisaged last year, on account of incremental working capital required to manage the bank guarantee requirements for margin obligations. With every trading day as an expiry day for indices across NSE and BSE and growing volumes, the working capital requirement for broking businesses of our scale and size have increased considerably over the last few quarters.
Employee benefit expenses, including cost of granting ESOPs, was at about INR 1.5 billion - INR 1.59 billion for the quarter, sequentially higher by 12% due to additional headcount, primarily in the wealth management business, ramp up of our asset management business, data analytics, technology and product functions.
Our other expense for the quarter clocked at INR 4.3 billion, being 33% higher sequentially, driven by 17% growth in our client acquisition, leading to an increase in one-time client acquisition costs and onboarding costs. Other expenses for the quarter also include INR 227 million apportioned towards IPL associate sponsorship for related and related digital and media advert spends. Operating expenses were also higher on account of higher spends on cloud infrastructure, in line with the growth of the business. Here, I would like to inform you that Angel One will continue to invest in scaling up its brand over the next few years. In the ongoing quarter, we intend to spend about INR 1.2 billion towards the remainder of the annual sponsorship costs and digital and electronic media adverts throughout the ongoing IPL season.
Our brand spend thereafter for the rest of the year will be in line with earlier trends. However, such spends will help us to significantly amplify the brand across the country, giving us better reach to our target audience. Our consolidated EBITDA margin expanded to 44.8% for the quarter versus 44% in quarter three of FY 2024. This margin remains within our guided range. The upfront one-time investment in acquiring more clients today helps us to grow the business going forward, thus reaping benefits of better operating leverage. Depreciation and amortization costs increased by 27% to INR 167 million in quarter four of FY 2024 on account of augmentation of technology assets at our data center and disaster recovery sites required to manage the growing client base and order volumes.
Our consolidated profit after tax from continuing operations grew by 31% quarter-on-quarter from INR 2.6 billion in quarter three to over INR 3.4 billion in quarter four, making this our highest ever quarterly profit. Our FY 2024 total gross revenues and profit after tax grew by 42% year-on-year and 26% year-on-year to INR 42.8 billion and INR 11.3 billion respectively. Period ending cash and cash equivalent increased to INR 98.4 billion on the back of increase in client margins and cash generated from the business. Period end client funding book grew to nearly INR 17.7 billion, compared to INR 11.5 billion as of March 2023. Consolidated net worth of the company grew to INR 30.4 billion.
This does not include the recently concluded fundraise of INR 15 billion, as the funds came in early April. As we continue to operate the business within our desired margin profile, our FY 2024 return on average equity remains healthy at 43.3%. The funds raised via QIP have been deployed as working capital into the business. The current quarter will have some elevated costs on account of IPL, annual increments and new stock grants, which will have an impact on the margin of the business for this quarter. The RoA post the fundraise will also see a decline before gradually going back with growth benefits of deployment coming in towards the end of the financial year. With this, I conclude the presentation and open the floor for further discussion. Thank you.
Thank you very much, sir. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking your questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Swarnabh Mukherjee from B&K Securities. Please go ahead.
Yes, thank you. Good morning, sirs, and congrats on a great set of numbers. Two, three questions from my side. First, in terms of your broking business, so the major metric, which is the number of orders we are doing in a day, if you could give us some, you know, idea in terms of, you know, this growth, how much of that has come from what you alluded in your initial speech, that you know, the number of days when expiry is happening has gone up. So that must be one of the factors. What are the other factors which would have, you know, taken this number up for the quarter, including maybe client activation or existing clients trading more?
If you could give some, some ballpark quantification of that, that would be very helpful. And, going ahead, what would be your aspirations to take this number? Because we have already, seen a sizable jump in the number from where it was, say, in FY 2023. And, should, can it be, you know, can it see a similar level of traction going ahead? What would be your aspiration, if I were to ask you on that? So, yeah, so that would be my first question. And also maybe, an addendum to that is that if you could, also give some color on what proportion of this, number of orders that are coming in is coming from, your engagement with BSE. That would be very helpful.
So that is the first part. The other things are the branding spend that you have mentioned. Does this also... I mean, is it inclusive of the IPL-related costs that would be there in the P&L? If you could give some color on that. And I had, sir, if you could also explain the pie charts in slide number 10, which you have highlighted.
In particular, wanted to understand that in the two cohorts that you have provided, FY 2021 and FY 2022, you have given a number which is close to around 50%. So 54% for FY 2021 set of clients and 49% for FY 2022 set of clients who have transacted. So what happens for the other close to 50% clients? So is there a scope of kind of activating revenue out of them in future, or would they remain as inactive customers? And what broader message you would like to give through these slides, if you could highlight?
Yeah, sure. First, I'll just answer in terms of increase in orders. If you see, when we started this financial year, we were clocking around 42 lakh order per day, which in quarter four was 86. Parallelly, if you look, customers that we were acquiring was around 4, 4.2 lakh per this thing, month, which by Gen and Set, we were clocking around 10 lakh clients per month. That we were acquiring around, not clocking, acquiring around 10 lakh clients per month.
So this new set of customers, when they come in, definitely, they are active, and what orders we get from our vintage clients and new cohorts also are of a similar kind of nature, where when they are onboarded, within 10-15 days, they are active on our platform. So primarily, it is because we have acquired a huge set of customers, much beyond growth that we regularly clock. Due to kind of like vintage base also being active on our customers, as we have explained in slide nine and 10, combined with new set of customers, we saw activity going up. Second, proportion of orders of BSE, we don't disclose that, but that is not a significant proportion. It is proportionate to whatever order we clock on NSE and all that.
So it is not that BSE has contributed in a big way, although we have a decent market share across NSE, BSE, and all other segments. On branding spend, yes, what we have shown, it includes IPL. Vineet would be a right person to walk you through this number. And on slide 10, specifically, Amit or Vineet, you can take this question.
Sure. So, Swarnabh , on the IPL spend, as I just spoke in the commentary, we spent about INR 22.7 crore in quarter four, specifically in the month of March. This includes the proportionate share of the sponsorship, as well as the spend towards media and digital adverts. So, as you would be aware, we've won the bid for INR 82 crore, annual bid for associate sponsorship. This, what we are doing is, we are spreading it across all the matches. So there are about 74-75 matches to be held in IPL this season, of which about 13 were held in the month of March.
So the proportionate share of that 82 towards the sponsorship cost has been booked in the month of March, along with the spends towards digital and media adverts. The balance, plus the spend towards digital and media adverts, would be spent in the month of April, May, and June, across the entire season. That will be roughly in the range of about INR 1.2 billion or INR 120 crore.
Okay. So, sir, the remaining amount will be INR 120 crore, so nothing additional apart from the IPL will be selected?
Yeah. On the IPL front, this will be the total spend, and thereafter, we will continue to spend on our brand as we do as part of our general, you know, spend.
All right. So, sir, just to clarify once, in slide nine, you have given that for FY 2024, branding spend was around INR 88 crore. So that number for FY 2025, we can take INR 120 crore. That would be correct understanding?
No, that would be INR 120 crore only in the first quarter. This is across IPL, and thereafter, so what you can do is, you can reduce INR 23 crore from INR 88 crore and spread it over the balance, say, nine months to 10 months to understand what is the spend every month going forward, in the future.
Okay, sir. Got it. So, understandably, sir, on this, the margin outcome of 1Q would be, I mean, lower compared to what it is, your guided range is. For the full year, are we confident to remain in the guided range?
Yes. Yes. So as I said, this elevated cost is going to be in the quarter one, but as we go through the entire year, the margins will be in the range of, the guided range. And that's where we always, you know, advise our analysts and investors to look at our business from a yearly basis and not on a quarter-on-quarter basis.
Just to add over here, the, this branding cost, and when we are acquiring more customer than what we acquired in previous quarter, it will appear there is an impact. As I always said, this is kind of an upfront cost. So, and if you refer to slide number nine, we are clearly showing that all vintage customers across five years have given us revenue. So best way would be that when, in the time this phase of growth continues, and we are hopeful it will continue for many more years, whenever, in a quarter, we acquire more than what we acquired previous quarter, there would be, that, that, will appear there's a suppression of margin.
But that's only upfront cost, which you have to suppose you want to know, annualize kind of an OPM, that will help you to remove it for the time being. And if you are taking it, you divide it by five years, because your proportion, 12.5% of a new kind of like cost that we have taken. So lifetime value of a customer as shown in slide number nine, it is five years and beyond. So this all cost that we are taking up front in terms of acquiring more customer and getting more market share, is making our business model more stronger.
Right, sir. Got it. Sir, on the, you know, aspiration in terms of number of orders per day, if you could give some color?
No. Like, as I said, that in this time, we are able to acquire more customer, and we are able to get revenue from our existing customers, the number of orders will grow. Now, to give a number would be like getting, guessing into forward-looking statements.
Okay, sir. Understood.
Yeah.
If you could take my last on that-
Yes, Swarnabh. So Amit here, I'll perhaps help you understand that slide. So are you able to hear me clearly, Swarnabh ?
... Yes, sir, you're on.
Yeah, yeah.
Yes.
Please go.
Okay, so, some of the couple of messages that we are giving out here, one is, if you know the, NSE headline active client that you usually get to see at the end of the month, which NSE publishes. You will see that, on an average, Angel is about 27%-28%, active customers who are active on any given day in a, in a rolling twelve-month period. So that's the, that's the data that you see as a headline number. What we are trying to convey is that that is not the right way to look at, the, the active customers. The right way to look at is how many unique customers are active over a longer period of time.
Because not all customers become active in the year in which they are acquired, and they begin to test the market, they begin to test the platform, test the process, the journey, and then they slowly begin to get active. So this slide that we are referring to actually shows that for an FY 2021 cohort of customers that were acquired, close to 54 customers, 54% of them, became active over the next four years. We looked at that for the subsequent year, too, for the subsequent year's cohort customers. In fact, in the subsequent year, close to 50% customers became active in the three years that that cohort existed. This implies that directionally, it can be far more than 50%, because all these customers become active over time.
And that is the power of the platform that we are trying to convey so far as Angel is concerned. And in that context, too, the other message we wanted to convey is, even for customers who are doing pure futures and options, over time, after having understood the market well, begin to carry out long-term equity investment. And therefore, this slide actually shows almost all the F&O customers, and there's a very small portion of an F&O customer who have not gone into equity as an asset class, but an overwhelming majority of them eventually go into equities, build a portfolio and therefore stay consistent on the platform.
Now, imagine these customers, even after doing F&O, because they have built an equity portfolio, one is they have tested the fact that when they do long-term investment, monies grow. At the same time, they're now going to remain sticky on our platform when it comes to engaging with that customer. I hope, Swarnabh , that is clear to you?
Yes, sir. Just one point. So the data shows that in both the situations, the count for number of customers in only cash is higher than what it is for F&O. So does that mean that people who are coming in, a large part will actually only do cash and not F&O? That would be. Am I getting it right there?
The journey here is that when majority or at least some portion of our customers, when they come on our platform, the first point of engagement could remain an F&O, but eventually they will also have equity. What this shows is F&O and equity. So the blue portion is actually F&O and equity. So around, around close to what? About 25% or 30% of them are F&O, who are also doing equity. And close to another about 40%-50% of... or 40% of them are actually doing only equity. So the point is not everybody is doing F&O. People who are doing F&O are also doing cash, and people who are in cash are only doing cash.
Okay, sir. Got it. Got it. I'll, you know, maybe we'll take this offline to understand this in a little bit.
Sure, sure, sure, Swarnabh .
Yeah. So thanks. Thank you, everyone. I just maybe one quick thing. There has been some news flows regarding regulators looking at the F&O space. This, you know, has come quite, you know, several times in the last one year. But any conversations you are having in terms of risk management of customers from the F&O side, if you could give some color?
No, currently, if you see there, the concrete thing, whatever, like, discussion we are having with regulators, that has been implemented and that is something like, does not really concern us, because their main focus is on not to lure a customer, not to kind of ensure wrong loss and profit statements and all that. I think that is quite old news now. There's nothing new that I have heard about.
Okay, sir. Understood. Very helpful. Thank you so much and all the best for the year ahead. Thank you.
Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address questions from all participants in the conference, please limit your questions to two or one per participant. Should you have a follow-up question, please rejoin the queue. Thank you. The next question is from the line of Sanketh Godha from Avendus Spark. Please go ahead.
Yeah, thank you. Thank you for the opportunity. Sir, I'm listening to slide number nine, and the cohort analysis what you have given. See, if I do a simple math there, the revenue earned in that year where you acquired the client and do revenue per client in that particular year, then I see there is a structural decline in the revenue earned per new client what you have acquired. Means, if I do that math, that number is INR 1,860 for FY 2020. That number is INR 700 for FY 2024. So, sir, just wanted to understand that incremental clients what you are adding, the marginal revenue they are bringing is meaningfully lower compared to what you are adding in FY 2020.
So just wanted to understand that client addition really matters from a revenue growth point of view, because incrementally the revenue addition seems to be much lower for every client you add. That's my first question. And the second question that I have is that with respect to QIP, INR 1,500 crore you raised, naturally it will result in a reduction in the working capital requirement. So just wanted to understand how much borrowing costs will further come down in FY 2025 going ahead with the fresh capital coming in. And lastly, on to Vineet, if I understood it right, INR 120 crore is what you will spend on IPL, and that number will be a recurring number for next four years. That's the way I need to look at it, right? These are my questions, yeah.
Okay. So let me answer the first one. See, on relative basis, always when you acquire a new kind of client from new territory or a new demography, always it takes time to optimize it. So what we look at is not that, okay, we want only customers who give kind of like very high revenue. What we look at is what's the cost to acquire new set of customers? And if that fits in our model, where we say that whatever cost we take to acquire this customer would be able to give us an OPM of around 50%-60%, we would like to go and expand. That is how all digital players have expanded their market share. Traditional brokers were stuck with high ticket size, but we thought that we can go into new territories, acquire those customers.
If it is profitable, if unitized economy is kind of favorable, we should go and acquire those customers. So if you look at demographic change which has happened across the years, we are now acquiring customers from tier three and beyond. We are acquiring customers who are young millennials and, Gen Z and all that. So these are new set of customers who are getting exposure to capital market. What we look at, if you look at our margins and all that, yeah, this is how we have expanded our market share, and there is a stickiness of the customer, whatever, whichever year we have acquired. They continue to be on our platform for next years, following years, and we are able to cross-sell many products.
So right now it is too early to say what would be a lifetime value of a customer where we haven't sold all the products to this customer. What we look at, what the cost of acquisition and what would be lifetime value of a customer. With this cohort that we are acquiring also shows that lifetime value of a customer will be around in the region of 7x. In digital model, I feel that, up to the level of 5.5, 6x also, we are profitable and we can maintain these margins. So with that approach, every quarter we see what are the new kind of areas that we can get into.
This process has been going on since last three, four years. So we try to get into a new kind of like channel, new kind of demography, new PIN codes and acquire customer. And what we see across here, they're able to give us a decent OPM. So we would not look at relative basis, we look at absolute basis, what's the cost, what's the revenue?
Yeah, sir, see, a follow-up on, on that, Dinesh, but just a small, small clarification. So the number is INR 700 per gross client today. So, any number below which you believe that it is unviable to acquire more clients, maybe say INR 400, INR 500?
700, actually, whenever year completes, client has not completed 12 months.
Correct.
Some clients we acquired in the later quarter, some quarter we acquired in the previous quarter. So if I look at 12 months steady state kind of revenue, there we don't see any kind of like big deterioration or big concern.
Got you, sir. Fair, fair. Thanks. Thanks for that. Maybe if you can answer next-
On your, yeah, on your question on QIP, Vineet. QIP and IPL, give and take.
Yeah.
So, Sanketh, on the funds raised from QIP, we've raised about INR 1,500 crore, and this will be deployed across margins with the exchanges and to you know, grow our MTF book. In terms of the finance cost, that is a you know, subjectivity-based question because with the growth in the business volumes, the growth in finance cost will be there. But I would tell you that it would be in that same range of what we've spent in the last quarter. As a percentage of the gross revenue, it's not going to be very different from that. But again, it depends on how we grow our client funding book and the you know, the volumes of the orders growth that we see for the current year. On the IPL cost, the commitment-
Just, I would like to add over here, Sanketh, this QIP was not to retire debt. It's growth capital. We can see huge growth, and we would like to deploy this capital for the growth of the business, be it margin trading book or including orders and all that. Yeah, Vineet, you can take away. Sorry, IPL.
Yeah. On the IPL, the committed cost for the next four years is about INR 82.5 crore annually. And beyond that, whatever we are going to spend on digital and media adverts is, over and above that. For this year, you're right, we are, you know, committed to spend almost like, INR 143-INR 145 crore over this entire IPL season, including the media adverts and, digital ads.
Okay. Okay, sir, sorry, one small clarification. 1.2, 120 crore is excluding 22.7 crore you have already spent in fourth quarter, right? So, for the full year, the cost will be 120 crores.
No, the cost of this entire IPL sponsorship and related advert spends is INR 143 crore, as we see it today, of which 23 has been accounted for in quarter four, and about INR 120 crore will be accounted for in the current quarter.
Perfect. Thank you. Thank you, that is well. Thank you very much.
Thank you. The next question is from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Yeah. Hi, good morning, everyone. Congrats on good set of numbers. Firstly, sir, you know, like, the spend on IPL, now, we've already almost seen one month of IPL. How has been the impact of the spend that we are doing on this? Is it better? Is the experience better than what we had thought or what we were doing without IPL? How has been the experience so far? That would be my first question. Second, and in fact, just following up on Sanketh's question earlier, so if you look at that run rate has come off from, you know, 1,860 to 700, and even in the second year, when we look at it, it's come down from 3,400 to 1,500.
For the third year, again, it's down from 3,000 to 1,600. So, you know, that has been the declining trend. Whether this is a phase? Is this something where, you know, possibly this is the numbers that we should look at, or is there a scope for this to further go down? So the point that I'm making is, the customers that you would have acquired in FY 2024, about 8.8 million, and they have given around 615 crore of revenues, and so that's 700.
So what would be the number of trades that they would have given, whether that is a number that we should, you know, is kind of achievable or, you know, possibly further more downside can be looked at on this number? Lastly, just a clarification, if you can give on the presentation slide number 10, you know. What do you mean by when you say realized equity gain of INR 5.5 billion and unrealized equity gain of INR 18 billion? Could you just clarify this one for FY 2022? Yeah, those would be my questions. Thanks.
Sure. Yeah, Jain, thank you for your compliment, first of all. And now, coming on IPL spend, although it is one month, but, like, broadly, we are looking at increasing visibility of Angel One across tier three and beyond. And IPL is the best media to really see a jump up in terms of spontaneous recall or maybe people recollecting Angel One as a fintech player. So benefit of this would be with long term. I would say, this will take some time for that, this visibility to kick in and result in some good numbers. But what we are seeing is that now when we are running our digital campaigns and all that, acceptability and kind of like recognition is very high, and we believe that this will result in some business numbers.
For us, it is important to be visible across all tiers, because mostly customers that we are getting is from tier three and beyond. Cricket is a very popular kind of sports across all genre, across all age group. So initial numbers are showing a tremendous kind of, like, visibility benefit that we have got. So we believe this will boil down to business numbers. So that is the main objective that we went for IPL, to get a good kind of, like, spontaneous recall and top of the mind recall from audience who was looking at digital stockbroking. In digital space, what happens?
Yeah.
There is space for three players. So we want to see when a customer, a prospective customer, is thinking about stockbroking, does he recall our name on the top? That means we'll get a market share of 30%, 40%, 40%. He or she has to recall that name in at least top three. So that one lead indicator, which will help us that, okay, when this population of people who are having PAN account, internet trading, internet account an d all that, which is around 50-60 crores, when they think about stockbroking, are they thinking about Angel One?
If answer is yes, there is a of this huge revenue pie that we are going to see in next five, six years, by default, there's a lead indicator to suggest that three, like, from one out of three is recalling Angel One name. So that is the purpose of this IPL and branding. Okay. Now, coming to your FY 2024, the way you are calculating, we acquired 8.8 million, but revenue of this customer did not come for all 12 months. Okay? If you see, our most of the acquisition has happened in December, January, and February. They haven't contributed total 12 months.
So the way we look at it is that some lead kind of like, kind of like, parameters where our data science team works, that if you are getting this kind of, like, revenue in first month, second month, so they extrapolate what kind of, like, lifetime value or revenue you'll get when they complete 12 months. And we have been perfect modeling that to the tune of, like, error of 1.5%-2%. So clients that we have acquired clearly shows that they are profitable, and they will fall within that bracket of break even of 6-7 months. They will fall in the bracket where you'll be able to get an OPM of around 50%. So that is our main objective, to be very focused on business metrics.
If a new pocket opens up and we see there is a huge potential in terms of increasing lifetime value, and our data science is able to extrapolate that trend, so we try to spend early, and we have been doing it in last three, four years. That's the secret sauce that we were able to be successful in digital modeling. Now, we have perfected that modeling to an extent; if we acquire a customer, we are able to predict what kinds of revenue we'll get in the next 12 months. So then we work our digital. It fits in our OPM and break-even period and all that. We go aggressive and acquire that market share. On slide number 10, Amit, you'd like to take it forward? On that.
Yeah, yeah, I'll do that. I'll do that.
Yeah. Yeah.
That's right. So Prayesh, on the slide number 10, what we mean by realized gain is, these are customers who have traded in equity or at least bought an equity and then sold in the course of the last four years. The customers who were acquired in FY 2021, in the four-year period that they had been in existence on our platform-
Some of them would have actually sold their portfolio in the course of four years, and some have continued to hold the portfolio as of 31 March 2024. So the realized equity gain is that part of the gain that was bought and sold in the course of the four years. The unrealized gain is those that are getting held, continue to be held as on FY 2024, and that value of the portfolio is actually worth INR 66 billion and a gain of INR 24 billion of that INR 66 billion. The INR 66 billion includes the gain of INR 24 billion.
Got it. But sir, when you say INR 7.4 billion, does that include only cash, portfolio churn, or this also includes F&O? Or because these are clients who are doing both F&O and cash, right? So would that mean that they would have also owned some profits on F&O and combine or possible, you know, combination of loss in F&O and for, gain some cash? Is that the right way to think about it?
No, Prayesh. So the purpose of that is to say that there is a realized equity gain.
Okay.
It is not about F&O. It's pure equity gain. The intention here is to say that customers who are doing F&O are also doing equity, and they are experiencing gain. That's the purpose of this slide.
Got it. And compliments for, you know, this-
The reason is that, okay, like, there's a concern in the market that, people just do F&O. What we want to say is that this young population is always attracted towards quick money, but not that once they are unable to achieve something successful in F&O, they stop, investing. They move towards investment, and once you move towards investment, and you see some kind of, like, profit, we, you know, be sticky on our platform.
Because across all that kind of, like, life cycle, when this person is thinking about saving, instead of going to a bank and putting money at 6%, this person has seen the benefit of equity appreciation. This person will remain and put all kind of lifetime saving in equity market if they learn how to really deal with mutual fund, equity, portfolios and all that. We are seeing early signs where we are seeing customer who started the journey as a trader are also moving towards equity and creating a portfolio.
Compliments on, you know, the amount of data that you are disclosing. I think that this is just helping us understand the business more granularly. Thank you for sharing all this information.
Thank you.
Thank you.
Thank you. The next question is from the line of Nidhesh from Investec. Please go ahead.
Thank you for the opportunity. On the corporate structure changes that we announced in the one or two quarters back, is there any update on the regulatory approval on the corporate structure changes so that we are planning to do?
Vineet, you'd like to take this question?
Yes. So, no, we are still engaging with the regulator in terms of making them understand the entire structure. So, no update as of now.
Sure. Secondly, what is the guidance for EBITDA margin? Are we saying that we will be in the guided range of 45%-50% for full year FY 2025, even accounting for, even after accounting for IPL cost?
Yes. So now over here, like, as we... As I said that, if you look at, like, increased cost in acquisition and cost that we take in IPL, it has a huge benefit. But if we stagger it for 12 months, we would be within this range of 45%-50% OPM, and only impact would be, other businesses that we are building that can have an impact of around 1.5%-2%. Vineet, you would like to elaborate that?
So, what we emphasize is that we will be in that range of about 45%-47% for the next year. But there will be a impact of about 1.5% on the new businesses that we are building across AMC and Wealth. So, you can take our, you know, the average, margin profile to be in the range of about 45% for the next year, 42%, 43% to 45%.
Sure. Sure. Lastly, the new businesses that we are incubating, how do we think about from a medium perspective, medium term perspective, let's say three, five years? What sort of revenue contribution are all these new, excluding broking business, can contribute to our P&L?
We see huge, kind of, synergy, and this all businesses that we are building, complements to what we are doing until now. So when we are talking about acquiring customer, as we look at the cross-selling, we look at that we should be our services should be available across all segments, be it mass affluent, HNI, UHNI and all that. So it will take its own time for us to build all that businesses to a level where we say it will have an contribution in terms of revenue, profits and all that.
But all said and done, we are seeing a huge opportunity in both the businesses, particularly wealth management, where we have got very senior kind of like co-founders who know their business. We are excellent at in terms of technology and all that. We see a great future. But for this one or two years, I think broking is doing exceedingly well, and it makes sense for us to invest in future trends.
No, but, any number you want to put, let me find this out, X% of revenue may come from the new businesses?
As I, as you said that in terms of expenses, this will have an impact of around, say, 1.5% on the OP margin. But in terms of building a business, too early right now. Srikanth, you would like to give a brief on this wealth management?
Yeah, sure, Dinesh. Thank you for the question. But as Dinesh mentioned, a very early stage, I think the team has just sort of come on board about a month, month and a half back. We do have aspirations to create two large verticals. One is to cater to the ultra-high net worth, or in other words, $5 million plus, which is something that the team has almost two decades of experience in sort of catering to. We think that there are huge opportunities available there in terms of cost overheads that can be brought down, using technology, and that is one of the reasons why we are super excited being part of this family, which is very efficiently use technology.
And the second, which I think is where a lot of interest also lie for all of us to create, is the affluent or the emerging rich men, as we call, where there is a lot of width available for us to take all our trade and craft that we have taken so far for the ultra-rich to the next level of emerging rich in India. And I think that reach and width is not possible if we don't marry the right domain and right tech, and that is how we are trying to build.
As far as some guidance is concerned, very early days. I think over the course of some of the other calls that we will have and we will interact, we will have a little more guidance. We are also awaiting the necessary regulatory approvals to come in place before we hit the rubber on the road, so we will keep everyone posted.
Sure. Thank you, sir. That's it from my side.
Thank you. We'll take the next question from the line of Jayant Kharote from Jefferies. Please go ahead.
Thank you for the opportunity. Two questions. First is on the F&O market, broader market in general, wanted your view, sir. We've seen a lot of HFTs are sort of increasing. If you track the NSE market, where the share of co-location is trade is now almost 60%-65% in the equity derivatives segment. The other... We have seen the low latency prop traders were making profits, but retail still got to keep some. But with the HFT sort of increasing and the outlook is much larger players coming in the market in the next one or two years, do you think the retail profit pool can shrink meaningfully and then spread on these five products can come off meaningfully, and it will have, of course, a knock-on effect on overall retail volumes?
So would love to hear how your view of these two problems? Specifically because, you know, NSE is also adding a data center in Navi Mumbai, so that will open up much more co-location racks. There is a regulatory sort of arbitrage between having access to those racks for retail investors. So just wanted your view on this one, and I'll ask my second question after that.
Sure, sure. See, when we look at F&O, there are two sides, of a trade when it is executed. One side is retail, retail, core retail, and second side is HNI, HFT, and FIs who are putting that trade. So, when we are talking about retail, a second leg is executed by this players, what you're talking about, HFT or co-location or, kind of like FIs. So retail is not impacted. You see, market share of retail, almost it has become, remained constant. That does not fluctuate in a big way, would be in the region of 45%-44%. So we take a part of market share from this, segment. We are not into HFT. We are not into co-location business. We are not into kind of unlike, arbitrage desk.
So whatever volume you are seeing, it is purely because of retail participation. So what we are seeing is that retail in India is really taking lots of interest. They want to participate in capital market, and when they are participating, that is a segment that we are aiming at, and we are seeing that we are able to increase market share. But if you look at retail, that what is needed to come in this market, we are saying you need an internet kind of like connection, smartphone or any other device, and you should have a PAN card and reasonable saving, where you can start your journey investing in equity market. It can be as low as INR 500, INR 1,000, INR 2,000, start a SIP, mutual fund.
Slowly, as you progress in your life, they try out different, different segment, the F&O, cash, commodity and all that. So we are seeing a huge opportunity, but potential is huge. Now, when a larger player comes in this market, they enable larger market, they enable wider market to come in and participate. And we, as I said, that being recognized as a fintech player, where we have a kind of incremental, kind of like market share on this incremental acquisition that we, that we do to the tune of 23%-24%, we are beneficial because our model is very different. The customer on our platform slowly evolves to higher ticket size and more towards a kind of like area where he wants to invest in equity, mutual fund, or maybe later on go towards wealth management product.
So we feel that introduction of larger player is going to help expand this market. When we have such a big population who have reasonable savings... What, what the reason they are not coming to equity market? Because of lack of awareness. But they are concerned about lots of things which must have happened in the past. So we always feel that a new player coming in with a big budget is going to expand this market, and that is going to help us increase market share. And on your first part? Hello?
Dinesh, sir, your audio is not-
Yeah. Can you hear me?
Yeah, I can hear you now. Please proceed.
Yeah, I can. Okay. No, I have completed my answer. Is there anything-
Actually, my question was more about product profitability, because we have limited products in the F&O market, right? Five products. So because I was more worried that the product profitability of the spreads will become so thin that, for the retail player, basically, does this lead to fatigue?
No, currently we are not seeing any kind of like, price pressure or, any fatigue in terms of product, that we are, offering. The retailers are just, playing on, like, direction of the market, so they buy call or sell, the thing, or buy put. Beyond that, their activity is limited. So what we do is that we try to design certain kind of some like product journeys, where they are able to understand this better. When it comes to pricing, I don't think there is any price pressure. In fact, there's an kind of like opportunity for us to even charge for cash segment. Right now, we are looking at kind of an, revenue that we get from customers that are onboarded. It's quite decent enough for us to justify our costs. We are not charging on cash segment.
But if you want, we have a huge volume on the cash segment. If you want, we can charge it also. One of the competition or few of the companies, in fact, are charging on cash segment. But we are seeing there's a huge kind of like, revenue that is generated through other segments. We are okay keeping that at a zero, zero price.
Okay. So I, second question is, if you could explain the journey on the bank guarantee replacement, how has the... If you can tell me what is the average-
I'm unable to hear you.
Sorry, am I audible, sir?
Yeah, yeah.
Yeah. So if you could explain what is your average daily clearing margin with the clearing corporation? What is the mix of bank guarantees in that? How much has been replaced, and then how is the journey over the next few quarters?
As we said that this QIP was raised for growth, it was not for replacement of any instrument, but Vineet will be the right person to take this question.
So, our current bank guarantee deployment across the clearing corporations is about INR 2,800 crore. Apart from that, we also avail intraday facilities for you know, the time differences for the settlement with the exchanges.
Sir, INR 2,800 crore is fully own funded now?
Yes. Since September 2023, all bank guarantees that we have been deploying, in the business are own funded.
Okay. Sir, sir, sorry, just squeezing one last thing. This panel that the government is setting up with RBI, SEBI, there is some concern that, the bank guarantee, limits may be sort of, difficult to get from banks. Anything we are hearing, or are banks being a little more cautious in, in extending limits?
No, we've not faced any kind of difficulty in availing bank guarantees.
Thank you. Thank you very much. Congratulations on a great set up.
Sure. Thank you.
Thank you. The next question is from the line of Pallavi Deshpande from Sameeksha Capital. Please go ahead.
Yes, sir. Thank you. Thank you for taking my question. Just wanted to understand this little on the. We've seen on the AMC side, you know, the peers go ahead. I mean, I understand it's the approval side, so, you know, were they faster in filing their approvals, and that's why? That I just wanted to understand, because we've been leaders so far in everything.
Is Hemen there on our panel right now?
So, yeah, sorry, Pallavi, can you repeat the question? We will take it. Hemen is here.
Yeah. Hemen, our CEO, is here.
Right.
Pallavi, if you can repeat your question. We couldn't hear you.
Yeah. So just, on the AMC side, you know, I understand you mentioned about some approvals are pending, but, we've seen our peers actually, you know, launch that, ahead of us. So wondering, you know, were we late in filing the approvals? Were we behind them in filing them? Or, you know, how exactly, it has happened?
Yeah. So, see, on the AMC front, we are currently in the, undergoing the process of getting the approvals. While there is no regulatory timeline on when we'll get the approval, but I can just tell you that we are progressing well on that front. With reference to competition, see, I would not like to comment on any particular player, but let me tell you, as compared to the general industry trend of getting the approvals, we are very much in line with where we are progressing currently, and so nothing much to disclose on that front.
Right. Right. Yeah. Second was on this, you mentioned about the, you know, the unrealized gain, the slide where you mentioned about the client making that. So is that post the brokerage or pre brokerage? Equity gain of INR 5.5 billion for the F&O clients.
Amit, you'd like to take this?
Yeah, I'll take it, Vineet. So, Pallavi, this is the net realized gain. This is after all expenses for the customer. .. So the customer has made a net gain on his portfolio. Either he has realized it by selling off, and therefore it is called realized gain, and if he has not sold it and holding it, it is called unrealized gain. So it is, the gain to the customer after setting off of the cost of acquisition of those assets.
Right. So after the brokerage expense then?
Yeah, these are all post charges.
Right. Okay, right. And just lastly, you know, this is the last question here. So on the advertising spend, we've seen a significant ramp up, even excluding the IPL this year. It's tripled, right, the ad spend excluding IPL. So, I just clear on, you know, could there be a regulatory backlash, given this a very high listing on the IPL side? I mean.
See, Pallavi, we were always below average spending on branding and all that. But if you look at, like last few quarters, it has been almost like been constant, except for we getting into IPL sponsorship.
Hmm. Right. No, just given how much concern was there by SEBI, you know, I mean, like you said, that there's nothing much they can do, but given their concerns, it does, you know, create a-
There is no restriction like that.
Okay. Right. Thank you, sir.
Thank you. The next question is from the line of Dixit Doshi from Whitestone Financial Advisors Private Limited. Please go ahead.
Yeah, thanks for the opportunity. First question is on the page number nine presentation, where you have given the vintage clients. So, you have given the margins excluding the branding spend. It's more or less flat over last nine years. Can you give a margin excluding the branding and the client acquisition cost? Just to understand that, once the vintage clients' revenue comes, the vintage clients' margin is how it increases over the years. That's my first question. And secondly, on the wealth management, so you have mentioned that the cost will increase next year.
So, will our business be similar to the other wealth management companies where we'll be having a large pool of RMs and the physical is more of an offline business? Or, being a, you know, being a technology player, we'll be doing something differently on the wealth management side also, and leverage our technology and also our existing 22 million customer base. That's my second question. Just one small bookkeeping question. What will be the development cost next year?
Okay. So on sales cost, we don't really disclose the sales cost, but I think we have been incurring these high sales costs in many quarters. That will give you a great sense in terms of what our OPM has maintained across all these quarters. Maybe there is a quarter when we ramp up our sales, there is some kind of depreciation, but as revenue kicks in, we have seen that margin will catch up. Branding we gave separately because of new exercise we are doing. So for our analysts to understand that, okay, what is this cost? So that you all are aware that how this would be shaping up in maybe three, four quarters. So vintage-wise client, already we have given a kind of like what kind of like revenue we generate.
So you see there is kind of like very less drop in customers, we acquired even pre-2020, FY 2021 and acquired 2020 and 2021. So, if you take the sales force, as you say, the chart mainly shows that there is a lifetime value of five years and beyond. Up to five years, already you can see the data. So whatever sales force we do, it has to be apportioned for five years, but exact number, we don't reveal, so I would not be able to help you on that. On wealth management side, I will ask Srikanth to take it over, but ESOPs unit can give you more clarity.
Yes, sure. So for the next financial year, our budget for the ESOPs cost is about INR 100 crore, of which about 52 crore is the carry-forward cost of the ESOPs that have been granted over the last two or three years. And about 50 crore will be the cost, which will be incurred towards the new grants that we are going to do in this year.
I mean,
Srikanth, if you can take model and differentiate it.
Yes, absolutely. In fact, thank you for the question. I think it's a fair question. But in some sense, your question also related to the answer, the answer is yes. We encourage a deep integration between domain and tech. I think, at least we believe the next five to 10 years, the right to win in the ever-expanding wealth management landscape will be by people who can embrace technology in a way that we can take technology to much wider space. I think, wealth management in India so far has been more about going deep. We, at least in India, well, believe that it will now have to be played both in terms of depth, which is where high quality domain knowledge comes in, and in terms of width, which is where technology comes.
So, for example, there would be over the next few years, many products that could be available in a fractional manner. We've already seen white papers and circulars around fractional REITs. We are already seeing similar fractionalization across products. So while the team has a deep insight on what the ultra high net worth clients require, and we will continue to service that. We will use technology for that space to bring OPEX down, because one of the things that we see is most of the cost models for current wealth management firms are built keeping in mind revenue models which have completely changed. So revenue models have, over periods of time, been disintermediated and moved from upfront to a very back-ended kind of a revenue model. So we believe that usage of right technology can enhance productivity.
But we also think that large investors may not be 100% ready to fully consume everything without a high quality RM. So we envisage the right mix of an omni-channel kind of requirement for a client. And the next customer segment, which is the HNI and the affluent, we will be present in both, or, or at least that's the plan. In terms of having good quality RMs dispensing good quality services, and also using the technology leverage with the parent partners here in Juhu, create interfaces across backend and website, which is able to give customer the, the right services. So the idea is a right mix of domain and tech to be able to capture both depth and width, addition.
Yeah. Thank you.
Thank you. The next question is from the line of Aditya Sharma from Aditya Birla AMC. Please go ahead.
Hi, sir. Thanks for the opportunity. Just wanted to understand, the MTF book has declined quarter-on-quarter from INR 1,980-odd crore to INR 1,770 crore, while the market has been buoyant, and especially the cash market has been quite buoyant last quarter. If you could just help us understand. I know it's a balance sheet item, probably it was reflecting on the day, March 31st, but I just wanted to understand the reasons for the decline.
Yeah, sure. So MTF book was also rising, proportionate to our customer base and, volumes that we did in terms of number of orders. But by Feb, we realized that it is going to a point where we would need more capital. That is where we had put restrictions on customer, who were holding this margin trading. So that's the reason we did QIP and all that, so that we are well capitalized to ride this trend of, kind of like, growth in this MTF book. So we took a pause. Now we have restored back to normal. You will see a growth in MTF going forward.
Okay. Okay. Any aspirations from your side in terms of in next two years, can we do around INR 3,000 crore of lending in terms of MTF by the end of FY 2026? Is that a reasonable assumption to make?
Yeah, it's a reasonable assumption. So, like, only as I said, that by February we were around INR 2,100 crore, INR 200 crore of MTF.
Correct.
So-
Correct.
- to get to that 3,000 is, like, possible. It is not a difficult target. Aspiration target will be higher than that.
Sure, sir. Sure, sir. And also, sir, in terms of margins, when you have provided the breakup, so there has been significant improvement in terms of the margins from the AP business, so around 62 odd%. So just wanted to understand, if, if, what's the reason behind and, is it something structural or, is it, just for the quarter?
No, no, it is structural. I think I would ask Nishant to debrief on this AP business.
Yeah. So, what has happened is that, we were essentially having an omnichannel play, whereby a lot of engagement with our existing sub-brokers was through digital means. And we were also last year largely not acquiring new, sub-brokers. So any expense on account of sales would not have happened, and therefore, what you're seeing is a slightly, I would say, exaggerated, version of what the usual margins would look like.
Going forward, as we kind of start onboarding new sub-brokers and we start incurring some of those costs, plus, as we unlock new regions, in particular, rest of India where the existing presence or the existing contribution to the revenue is not that strong, I think some of these costs would also come into play, and therefore, the margin that you're referring to would kind of slow down a bit. But yes, overall story is very robust, and we would continue to kind of register the similar momentum that you've seen last year going forward.
Got it, sir. Just, a follow-up on this. So how are we progressing in terms of the AP, addition? If you could share, some bit of color on that, that would be helpful.
So there has been a very, very strong interest ever since that we restarted that process. However, we have been a bit choiceful in terms of the kind of sub-partners that we would like to engage with. We have kind of enhanced some of those screening parameters and ensuring that people who are coming on board are coming on board with a certain persona. And therefore, the idea is that going forward, we would like to onboard higher quality sub-brokers and who can be kind of contributing meaningfully to the client addition and be a long-term partner along with us.
Yes, sir. Thank you so much.
Thank you. The next question is from the line of Aravind R. from Sundaram Alternates. Please go ahead.
Hi, sir. Thank you so much for the opportunity. I would like to understand, like, what are our aspirations in terms of, in terms of client addition, maybe for next few years? What is your aspiration in terms of, you know, improving that, to make the client active, like, you know, you know, just how mentioned in the, how it, it was mentioned in the call that, you know, like 50% of clients used to, you know, become active in five years. Now, like it has, come down to three years,
Your voice is blurring, so can you just-
Sir, Mr. Aravind, there is a request, you kindly use your handset in that case, please.
Yeah. Okay. Can you hear me now? Is it better?
Yes, sir.
Yeah, better.
Please proceed.
Yeah. Sorry for the disturbance. What is our, what is our aspiration in terms of, you know, client addition? And then what is our aspiration in terms of, you know, improving that to make the client active, like, you know, how, you know, the clients is becoming active, used to be like five years, and now it has come down to three, four years. Is there any improving. Is there any further improvement possible there? And, what are our aspirations in, lending and deposits, you know, business that we have mentioned, either in terms of penetration among, existing clients and, you know, or are there any aspiration in terms of, you know, disbursement, you know, by FY 2025 or 2026? Another question is on considering the IPL association for five years, will this expense recover for next five years?
Yeah. So, our aspirations on this client acquisition, as we always say, being a digital player, we would aim to get a market share of around, in new acquisition, to the tune of around 35%. That is where we feel that a digital player should position themselves. So there's an aspiration, kind of like we have, that whatever client, new client come to market, we should be aspiring to get to that market share. Progressively, we are inching towards higher number every quarter and all that, so that is a positive thing. In terms of offering customer a multiple service, we believe time has come that we have to leverage our, kind of like, super app platform, where we offer multiple services to customer to increase their lifetime value and engagement on our platform.
So because of that, we'll see lots of kind of an active customer. As we refer to this in slide number 10, we have clearly shown that when we acquire a customer, across years, they become more active on our platform. So, Amit, if you can take that point, that would be helpful. One sec. On lending side, Saurabh can take that platform. And I'll just complete IPL and then hand it over to Amit and Saurabh. On IPL, it is not about recovering costs, it is about, as I said, that we have an aspiration to acquire to get a market share of new acquisition to 35%. And as I said, in digital business, lead indicators are that what a kind of recall people have for your brand.
So we want to see, we do lots of surveys and exercises to see our spontaneous recall for our brand and top of the mind recall when we are asking them: Which is the broking firm you are going to open? So there should be an Angel One name in that. That's a big indicator that we will be able to reach that market share of 35%. So, the IPL is more about visibility, about that recall, about that spontaneous recall that people should have. If they are thinking about stockbroking, Angel One should come in their mind. So, Amit, if you can take over for this activity of customer, and Saurabh can come later.
Aravind, so, as I understand, I guess you also want to understand how the customers will evolve over time, right? If that is the question, then, I mean, this slide actually says that in about four years' time, not just I mean, we are comparing this to, or we are actually kind of veering the discussion towards the active customers. And we are saying that, notwithstanding what NSE reports as the total number of customers who are active in a given year, what we are seeing is that when we see a certain cohort of customers that we acquire in a given year, how many of them, how many unique customers of them actually become active over a period of time? And therefore, this data actually represents that.
That in FY 2021, whatever customers we acquired, in this case, 2.4 million, 54% of them became active over a period of four years. So when we now revisit this data in the following years, I'm sure we will see a larger number there. Similar is the behavior of the subsequent cohort of customers that we acquired. So I hope that addresses your question, Aravind.
Yes, sir. Yes, sir.
Okay, Aravind, I'll give this to Saurabh to address on the lending and deposits aspirations.
Aravind, I think, your question on, on lending is, what is our aspiration in the next couple of years, right?
Yes, sir.
Yeah, so lending is largely the biggest area in financial services in India, and we also have very high aspirations there. At the moment, we are in beta testing phase of the lending product and the experience for our customers. And as soon as we are out of it, we'll start to aggressively build this vertical. In the next two to three years, you should see a very large lending player from our side the lending distribution place. In terms of deposits also, I think most likely this quarter or early next quarter, we should be out with our deposit offering, where we'll have tied up with a few banks and NBFCs to offer their corporate bonds and FDs.
Sir, any numbers you can give in terms of penetration you would like to see in few years? Or like, you know, the quantum of this, that you would like to see in future.
This question is pertaining to overall penetration, right?
Yeah. Especially with respect to new business. Yeah.
New business to, yeah, yeah, sure.
Mining the existing client time, yeah.
Yeah, I think as of now, we are still in the early stages of the business, right? The aspiration is quite large, but too early to give out a number right now in terms of the penetration that we'll hit.
Yeah. Just one clarification, like, so I understand the IPL association is for five years. I understand the importance of it. I'm just trying to understand, like, will this expense, you know, like, continue for, like, FY 2026, FY 2027 also, like. That's what I'm trying to understand.
No, see, I mean, if you look at IPL spend, as our base will, revenue will increase, so this spend will be very small amount compared to what we are spending today. So we are spending this so that we are able to gain market share. So when we, see our growth rate, and if this organization becomes 3x of what we are in five years, the IPL spend will be quite small and insignificant.
Sure. Thank you.
Thank you. Ladies and gentlemen, due to time constraints, that would be the last question for today. I would now like to hand the conference over to Mr. Dinesh Thakkar for closing comments. Over to you, sir.
Thank you for joining us on the call today. I hope we were able to answer your queries satisfactorily. Should you require any assistance, please feel free to contact Hitul Gutka, Head of Investor Relations, or SGA, our IR advisors. Good day.
Thank you, members of the management. Ladies and gentlemen, on behalf of Angel One Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.