Ladies and gentlemen, good day and welcome to Q4 FY2025 Earnings Conference Call hosted by Angel One Limited. 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 the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hitul Gutka from Angel One Limited. Thank you, and over to you, Mr. Gutka.
Good morning and welcome, everyone. Thank you for joining us today to discuss Angel One's Q4 FY2025 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 the press release are also available on the website. For today's call, Angel One is represented by Dinesh Thakkar, Chairman and Managing Director; Ambarish Kenghe , Group CEO; Vineet Agrawal, Group CFO; Saurabh Agarwal, CBO New Business; Hemen Bhatia, CEO AMC; Srikanth Subramanian, Co-Founder and CEO of Ionic Wealth. We also have the other 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 Q&A session.
Please note that there may be certain forward-looking statements during the course of the call, which must be viewed in aggregate with the risks that the company faces. With this brief introduction, I now invite Mr. Dinesh Thakkar for his opening remarks.
Thank you, Hitul. Good morning, everyone. India's Capital Markets are currently undergoing a transformative phase with multiple headwinds at play, including the implementation of F&O regulation alongside a volatile geopolitical backdrop, both of which are impacting buoyancy in the markets. While it's true that the impact of F&O regulation has led to an immediate decline in volume, reduced active client participation, and muted order activity, we view this development as fundamentally constructive. In the long run, we continue to believe that this is a temporary recalibration as market participants adjust to the evolving landscape. Historically, we have seen that regulatory interventions are often met with initial resistance, but they also ultimately foster a more sustainable, transparent, and effective ecosystem. This augurs well for intermediaries like us because we can better predict our unit economics and LTVs, thus making the business more resilient.
Key operational and financial metrics such as total number of orders, operating margin, and return ratio may not fully reflect the underlying strength of the businesses in the near term, given the prevailing softness in the broader market. As I mentioned during our quarterly earnings call, we anticipated being in a better position to assess the regulatory impact by the end of Q4 . It now appears that much of the initial disruption is indeed behind us. While client activity may remain somewhat subdued through the first half of FY2026, we have chosen to stay firmly committed to our growth investments. This decision may affect short-term profitability, but they are critical enablers of long-term value creation and market leadership. With the domestic macros improving gradually, inflation coming under control, and the central bank moving on softer interest rates, we believe that the situation should gradually return to normal.
We anticipate Q4 FY2026 will mark a normalized quarter, with operational and profitability metrics returning to their previous levels. We are encouraged by the healthy demand account opening, sustained retail participation, and reaffirming trends of Mutual Fund off-take to our platform. Though these are early signs, they nonetheless reinforce our confidence in strong underlying client interest. Even during the transition period, we remain sharply focused on delivering a superior client experience. Our steady progress towards leadership positions across metrics such as demand market share, NSE active client, and trading turnover attest to the resilience of our platform. Looking ahead, we are executing our long-term strategy to build a comprehensive financial service platform beyond broking to encompass credit, insurance, fixed income, wealth, and asset management. Our branding partnership with the Indian Premier Cricketing Tournament has further enhanced our visibility and strengthened our recall.
We are also investing significantly in technology to elevate the digital experience through the use of advanced analytics, Artificial Intelligence, and Machine Learning. We aim to curate personalized client journeys, improve risk profiling, and deliver relevant financial solutions in a timely and efficient manner. We are beginning to see tangible results from those efforts on our platform, driving deeper and more meaningful client-customer engagement. At this juncture, I am pleased to have Ambarish Kenghe or AK, our new Group CEO, join today's earnings call. Amrit is an accomplished leader with a proven track record in building and scaling impactful technology products across both global and Indian markets, including playing an instrumental role in the growth of Google Pay in India. Prior to that, he held senior leadership roles at Myntra, where he led product and platform strategy, and at Cisco, where he focused on building innovative collaboration technologies.
He also brings strategic insight from his time at Vineet Agrawal Company, where he advised global clients on business transformation. AK holds four patents to his name, displaying his strong academic credentials. He holds an MBA from UC Berkeley, a master's degree in Computer Science from Purdue University, a Master's Degree in Computer Science and Engineering from IIT Kanpur, and a Bachelor's Degree in Computer Engineering from ANU. AK's unique blend of deep product expertise, technology leadership, and strategic achievementship makes him well-positioned to lead the next phase of our growth. I'm pleased to introduce Rohit Chatter as our Chief Data Officer. Rohit brings over 29 years of experience in driving AI and data innovation at scale. With leadership roles at Walmart, InMobi, and Yahoo! he has led groundbreaking work in generative AI, AdTech transformation, and Big Data platforms, turning technology into a business advantage time and again.
His appointment reinforces our commitment to becoming an AI-first organization. With Rohit leading our data and AI strategy, we are well-positioned to accelerate innovation, deep customer engagement, and drive operational excellence. With favorable demographic trends in play, we are steadily enhancing our client relationship, traveling with them in their journey of wealth creation. Our expansive product and service offering, including credit, insurance, wealth, and asset management, will facilitate our garnering a greater wallet share from every client. The leadership of each of these businesses will provide you with further insights. I am also pleased to inform you that in line with our policy, the board has approved a final dividend of INR 26 per share of the consolidated annual profit of the company. Thank you for your continued trust and support as we work towards creating long-term value for all shareholders. I now invite Ambarish to provide further updates.
Thank you, DT. Good morning, everyone. Thank you for joining us on the call today. It is an absolute honor to be addressing all of you on my first earnings call as the Group CEO. Coming into this role as a technologist at the core, I'm truly excited by the opportunities that lie ahead of us. We are operating at the intersection of finance and technology, a space undergoing rapid and continuous transformation. What is most encouraging is how receptive and ready the market is for newer technologies that can create not just scale and efficiency, but also truly delightful client experiences and long-term engagement and impact. That said, I also want to acknowledge the dynamic and evolving nature of this segment of the FinTech industry. As DT mentioned, the impact of regulatory adjustments, current market conditions, and broader macro uncertainty is leading to some softness in volumes and revenues.
However, these are near-term fluctuations, and we remain confident that the underlying fundamentals of our business and the industry are intact and resilient. Most importantly, the long-term prospects of India remain as strong as ever. In fact, our long-term health indicators continue to remain robust. Even during such times, we have been successful in sustaining our market share across multiple metrics like total demat accounts, incremental demat account additions, active clients on NSE, and overall turnover. These numbers reflect continued client trust and strong operational execution despite a challenging environment. As it has been mentioned in our earlier earnings calls, I wish to reemphasize that technology remains the cornerstone of our growth strategy. As we look ahead, we see immense opportunity in leveraging Artificial Intelligence and Machine Learning to deepen our capabilities.
Whether it is about hyper-personalizing client journeys, understanding behavioral and risk profiles, or curating more relevant product offerings, AI can help us deliver greater value at scale. As we scale, AI will also make our internal processes and operations more efficient and effective. We are investing with a long-term view to ensure our platform continues to evolve into a truly intelligent end-to-end financial services destination. Let me now turn briefly to our assisted business. We refined our partner acquisition strategy, focusing on onboarding better quality partners. We are continuing with our hyper-local engagement strategy with partners for better long-term outcomes. I'm happy to share that the channel diversification strategy is also playing out well with a steady growth in its Mutual Fund, AUM.
To better support our channel partners and drive productivity, we continue to improve NXT, our digital platform for them, with emphasis on deeper client interactions, better advisory, and cross-sell capabilities. On the distribution side, while Saurabh will give you more details around it, I'm happy to share that we have expanded our partner roster to six for credit distribution and five for insurance. On the client side, we onboarded two banks, demonstrating the high level of confidence placed on us with respect to scalability this platform can achieve. We strongly believe this segment can play a significant role in diversifying our revenue base and addressing a wider set of financial needs for our clients in the long run. Our operational performance has been healthy in the macro schematic at play. We acquired 1.6 million clients, with 88% from Tier 2, Tier 3, and beyond cities.
Consistent and well-celebrated acquisitions drove our market share in demat accounts and incremental demat accounts higher, sequentially by 19 basis points and 50 basis points to 16.1% and 21%, respectively. Our market share in active clients and overall retail equity turnover remained steady at 15.4% and 19.9%, respectively, during the quarter. Angel One will continue on a path of sustainable growth while maintaining a strong focus on unit-level profitability. Our digital-first model enables scalable operations and enhances Lifetime Value, all while keeping costs efficient. Most importantly, we stay committed to serving our customers in the best possible way. I now invite Saurabh to provide further updates on the distribution business.
Thank you, AK. Good morning, everyone. Always a pleasure to have you with us, and I appreciate your time. Let me walk you through the key updates from this quarter and our outlook on the evolving distribution opportunity.
As AK mentioned, diversifying our products and service offerings to address the broad spectrum of our consumers' financial needs is central to our super app strategy. We have approached this in a calibrated manner, ensuring each rollout delivers the desired impact before scaling meaningfully. We will continue with this disciplined approach, as you will see some products reaching maturity while new rollouts are released in parallel. To this end, in Q4, we doubled down on strengthening our client journeys, expanding product coverage, and deepening our strategic partnership across verticals. Let me start with credit, a business we believe will become a formidable vertical for us going forward. This quarter, we added three more lenders on our platform, two banks and one fintech, bringing our total partnership to six. More integrations are underway, setting us up for broader coverage and a stronger funnel across consumer profiles.
We continue to see strong demand, particularly in unsecured loans, where we have disbursed over INR 7 billion cumulatively as of March 2025. Even as lenders adopt a cautious stance, we believe this foundation gives us credibility and momentum to scale from here. More importantly, we are investing in credit with a long-term and a strategic lens. We are building a proprietary lender allocation engine which matches customers with the right offers based on eligibility, risk, and likelihood of approval. We also continue to focus on building AI/ML-driven risk and propensity models, thus enhancing our ability to add more value to our customers and partners. The thesis remains clear. India's credit penetration is low, digital access is improving, and regulatory support is constructive. With a differentiated tech-led approach, we aim to build one of the most reliable, scalable, and partner- and consumer-friendly credit distribution platforms in the country.
In the Mutual Fund business, while the quarter saw some softness with new SIPs at INR 1.9 million, this trend was broadly in line with market sentiment. The good news is that our MF AUM continues to grow, and our share in incremental SIPs remains stable, a strong sign of platform stickiness. This business is not just about numbers. It is about brand trust and investor confidence. We had run our first MF brand campaign in Q3, and the response from young first-time investors was very encouraging. We are now focused on positioning Angel One as one of the most consumer-friendly investment platforms, especially for those just starting out on their financial journey. Our focus going forward will be to increase our brand consideration along with continuous improvement in client experience.
Overall, retention has been strong, and we are seeing more users adopt multi-product behavior, a natural validation of our super app strategy. In our insurance distribution business, we have onboarded two more insurers this quarter, enhancing our coverage and strengthening our proposition as a holistic one-stop insurance platform. The focus here is razor- sharp. Create best-in-class journeys with minimal friction and best pricing. Use tech to personalize policies based on customers' needs and build both assisted as well as fully digital offerings to serve all consumer segments well. We are currently in the process of integrating additional insurers, and over the next few quarters, this vertical will see expansion both in terms of product lines and reach. To summarize, while macro conditions remain a little volatile, our belief in the long-term opportunity remains stronger than ever.
Credit is a marathon, not a sprint, and we are building for scale and sustainability. Mutual Funds are showing clear signs of brand trust and platform love. Insurance will slowly move out of beta and into expansion mode. We are also investing well in data intelligence, personalization, and real-time recommendation engines so that every customer gets the right product from the right partner at the right time. With that, I'll pause here and hand it over to Hemen to share more on the AMC business.
Thank you. Thank you, Saurabh. Good morning, everyone. In our Q3 earnings call, we shared the exciting news of receiving the regulator's go-ahead to commence our Mutual Fund operations. I'm pleased to share that the progress since then has been both energizing as well as encouraging. In a short span of time, we successfully launched our maiden New Fund Offering.
We introduced two flagship products, the Angel One Nifty Total Market Index Fund and Angel One Nifty Total Market ETF, with the latter being India's first ETF tracking this index, a true first-mover achievement. Later in the quarter, we expanded our product suite with our first-ever offering, Angel One Nifty One Day Rate Liquid ETF Growth. These offerings mark our strategic entry into the passive investing space, and they reflect our commitment to simple, efficient, and scalable investment solutions. We distributed these products through a multi-channel strategy, leveraging our captive reach for our distribution partners and the direct route, ensuring a wide accessibility across investor segments. Now, let me share some early traction that peaked volume. In just a short time, we garnered INR 740 million in AUM across these three products.
More importantly, we saw participation from clients spread across over 8,800 PIN codes, a truly remarkable start for a newly launched AMC. This is not only a strong start, but it is also clearly validating investor appetite and trust they instill in us. This initial momentum reaffirms our conviction in the immense potential of passive investing in India. We believe this space is primed for structural growth driven by powerful underlying levers such as favorable demographic trends, rising income levels, and growing awareness of portfolio diversification and the role of passive products. Passive products are democratizing investing. They cater a wide spectrum from first-time investors seeking simplicity and transparency to seasoned professionals building long-term low-cost portfolios. What makes passive investing particularly compelling is its philosophy of owing the market rather than attempting to outperform it.
This approach minimizes the risk of poor stock selection, removes human bias, lowers portfolio costs, and supports long-term capital appreciation with minimal friction. These are the outcomes that clients are seeking. At Angel, we believe we are in the right place at the right time with the right capabilities to seize this unfolding opportunity. Looking ahead, we have ambitious plans to launch our product suite to cater to a variety of client needs, thus staying true to our mission of making quality investment accessible to all. In parallel, we are deeply committed to investor education, empowering clients to better understand the benefits of passive strategies and thereby driving deeper adoption. Our long-term vision is clear, that is, to emerge as a category leader in the passive investing space while consistently creating and enduring value for our clients and stakeholders.
With this, I take a pause and invite Srikanth to take you through the developments in our Wealth Management business.
Thank you, Hemen. Good morning, everyone. As my other colleagues covered the evolving landscape, I would like to take a moment to build on that by sharing our perspective on what lies ahead and how Ionic Wealth is positioning itself in this environment. In a world marked by uncertainty, with multiple global scenarios playing out simultaneously, prudence and preparedness are key. This is why we believe 2025 is the year of asset allocation. We are actively advising our clients to diversify across precious metals, including gold and silver, building duration in debt, and in some cases, practically even into global equities. Indian equities remain neutral with a staggered approach. Diversification is no longer optional; it is foundational. With an estimated AUM between $ 1 trillion-$ 1.2 trillion, India is entering a pivotal growth phase.
We are seeing new capital formation and active portfolio reshaping, from promoters of listed companies to a new generation of investors seeking differentiated opportunities. This signals a structural shift in how wealth is being created, mobilized, and deployed. Risk appetite, too, is evolving. Today's HNIs are increasingly embracing non-traditional asset classes, from pre-IPO participation to early-stage investing. Regulatory initiatives such as the Accredited Investor Framework and asset classes like AIF are further expanding access to sophisticated products. Fueling this momentum is the triple multiplier effect, which is the powerful convergence of rising HMI participation, asset appreciation, and incremental income-led savings.
Over the past year, we have laid a strong foundation across our key business verticals: the Ultra High Net Worth Individual Cohort, which we define as greater than INR 25 crores net worth; the HMI or the Wealth Tech Cohort, which we define as the INR 1-25 crores net worth segment; and our Alternate Asset verticals. What sets us apart is our decision to go omnichannel, giving our clients the flexibility to manage their wealth the way they choose. Our D2C app is seeing good initial momentum. Investors, from first-timers to seasoned professionals, are using the app not just to view their investment portfolio but also to use our insights to implement changes. Tools like tax calculators, analytics, and portfolio assessments are helping them make informed decisions.
While technology enables scale and access at one end for our HNI customers, our personalized portfolio-led approach continues to drive deep engagement at the other end for our Ultra HNI investors. Our Ultra High Net Worth business, which is clients above INR 25 crores net worth, is our current growth engine. We are leveraging our RM network to engage with listed promoters and founder entrepreneurs. The response to our tactical views and curated product suite has been extremely encouraging. Clients are particularly drawn to exclusive investment opportunities. On the other hand, the HNI or the Wealth Tech segment, which caters to investors between INR 1 crores and INR 25 crores, is where we see massive untapped potential.
In recent months, two approaches of ours have gained strong traction among HMIs: A, Fractionalization, enabling access to previously elusive investment opportunities at more accessible investment levels; and B, Accreditation, supporting clients in becoming accredited investors, thereby unlocking sophisticated products such as PMS and AIF at lower entry thresholds. Let me now take a moment to share a snapshot of our business progress. In the first year since inception, Ionic Wealth now manages over INR 3,790 crores in Assets Under Management, comprising of INR 3,327 crores in actively managed assets and an additional INR 463 crores in custody assets. We proudly serve a base of 680-plus clients across Ultra High Net Worth and the HNI segments through dedicated relationship managers, our website, and the mobile app, offering a seamless omnichannel experience tailored to their preferences. Our team has grown to 166 professionals, including 57 highly experienced relationship managers.
Equally strong are our tech team and product and research team. We have established our presence in nine key cities, ensuring we are close to our clients. In closing, we believe India offers a compelling long-term structural story, and Ionic Wealth is strategically positioned at the intersection of this opportunity. With this, I hand it over to Vineet for the next segment.
Thank you, Srikanth. Good morning, everyone. Q4 of Financial Year 2025 was the first full quarter post-implementation of the index derivative regulation. This, coupled with softer market conditions, led to a 22.4% decline in our number of orders to about INR 327 million. As a result, our Q4 FY 2025 gross and net revenues were lower by 16.3% and 15.7% sequentially. Our gross broking revenue, which accounted for about 60% of our total gross revenues, did grow by 22.6% sequentially to nearly INR 6.3 billion in Q4, owing to softer client activity. While F&O continues to be the larger contributor, its share in our overall gross broking income reduced to approximately 77% in Q4 of FY 2025 as compared to its range of 81%-87% in the last 11 quarters. Share of cash and commodity segments increased to 14% and 8.6% respectively in Q4 of FY 2025.
Share of direct business in our net broking revenues remained consistent at about 76%, with the balance 23% being contributed by clients from our assisted business unit. Our average client funding book remains steady at INR 40.3 billion for the quarter. We had lowered the interest rate on Margin Trading Funding to 14.99% in mid-November 2024. Q4 being the first full quarter of this change, we saw a 5.2% sequential decline in our interest income on this average book. The interest earned on Fixed Deposits was lower by 1.7% sequentially, owing to lower quantum of Fixed Deposits. Both of these led to a 3.4% sequential decline in our gross interest income to nearly INR 3.4 billion, thus accounting for about 32% of our gross total revenues for the quarter.
Income from depository operations, which accounted for just over 4% of our total gross revenues, declined by 20.5% sequentially, mainly due to lower cash delivery volumes. Income from distribution operations grew 4.6% sequentially to INR 314 million, accounting for 3% of our total gross revenue for the quarter. This was primarily driven by growth in distribution and insurance products. Finance cost decreased by 3.9% quarter- on- quarter to INR 803 million, pursuant to a marginal decrease in average cost of borrowings. However, the average quantum of borrowings were higher by 7.3% quarter- on- quarter, primarily for margin requirements at the Clearing Corporation. Employee benefit expenses, including cost of granting ESOPs, did grow 21.3% sequentially to nearly INR 1.9 billion. This was on account of one-time impact of the variable pay reversals by INR 641 million.
ESOP cost for the quarter was higher due to issuances of fresh annual grants under LTI Plan 2021 for Angel One, along with the grants for the Wealth Management business under its LTI Plan 2024. Other operating expenses for the quarter rose by 13.6% sequentially to INR 3.8 billion. This includes INR 344 million we spent on IPL Associate Partnership sponsorship and related digital and advert media spends during the quarter, which was not there in the previous quarter in addition to our regular brand spends. Our Q4 reported consolidated operating margin at 31.8% was lower by 1,019 basis points quarter- on- quarter as compared to our reported Q3 margins. This was because of sustained investments and acquiring clients even in softer market conditions, as we strongly believe that this will give us the substantial impetus for growth of our business in time to come.
Please also note that this operating margin subsumes expenses of incubating our new businesses of asset management and Wealth Management. As we go into Q1 of the current financial year, we will continue with our growth investments with an aim to expand our market share. Q1 of this financial year is also seasonally impacted on account of increments, proportionate booking of variable pay for the new fiscal, and higher IPL spend owing to more number of matches. Depreciation and amortization cost increased by 7% sequentially to INR 285 million in Q4 as we capitalized assets during the quarter. Our reported consolidated Profit After Tax declined by 38% quarter- on- quarter to INR 1.7 billion. Our reported total gross revenues and Profit After Tax for the full year FY 2025 stood at INR 52.5 billion and over INR 11.7 billion, representing a growth of 22.6% and 4% respectively over the corresponding period last year.
Period-end cash and cash equivalents were higher on account of marginally higher client monies coupled with our own cash generated during the course of the year. Correspondingly, some of this positive cash flow generated is also reflected in investments. Post our QIP last year, our client funding book soared by 2.2 times to INR 38.6 billion. This growth was funded through a mix of the QIP proceeds, our own cash generated, and borrowings, which led to a 1.3 times increase in our period-end borrowings. The consolidated net worth of the company increased to INR 56.4 billion as of 31 March 2025.
FY 2025 is a mixed year for the first half reaping benefit of view and market conditions and the second half impacted by regulatory changes and market softness, leading to an overall impact on our profitability and Return on Average Equity, which contracted to 27% as the business normalizes over the next few quarters. We strongly believe that our ROAE should trend back to its historical levels. With this, I conclude the presentation and open the floor for further discussion. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question comes from the line of Swarnabha Mukherjee with B&K Securities. Please go ahead.
Good morning, sir. Thank you for the opportunity. Two questions from my side. First one, I wanted to have a better understanding on the expense head for the quarter and how we should look about it for FY 2026. In particular, in terms of the reversal of the variable fee, what was the rationale for the same? When we move ahead in FY 2026, as you mentioned in your opening statement, in terms of incremental provision for variable fee for the next year, how should those numbers look for FY 2026? Also, if you could give similar comments related to the OpEx, because as I am seeing that the customer acquisition rate has come down, but even if I remove the IPL-related cost from the OpEx head that you have reported, I think the headline number looks fairly steady.
With lower customer acquisition, the OpEx levels still continue to remain steady. Has the Cost of Acquiring new customers gone up? If so, would it be a structural thing, or should we expect it to mellow down going forward? Based on the cost side, I also wanted to understand in terms of the cohort-level analysis that you have provided. If I look at the revenue generation across various cohorts, what I see is that in the current environment, FY 2025 versus FY 2024, the revenue drop for the customers acquired in fiscal 2023 has seen a more disproportionate impact. What is, if you could highlight, the reason why this particular cohort is more impacted than the others? Secondly, I also noticed that the break-even period has impacted.
Is this more a reflection of market situation, or is there something structural and should prompt us to look at our acquisition strategy? These are the broad-level questions. I have one or two bookkeeping questions which I can possibly ask after your response.
So Swarnabha, on this variable cost as our industry signal, always we say we have some buffers which are variable, which we can play with. When we set our targets, we set certain variable portion. If we miss that, because of regulatory changes and all that, we are unable to reach our targets. Definitely, there is a reversal of variable cost. Going forward, always, this is the practice. We do some projection. Based on that, we work out fixed and variable pay. For coming year also, same system would be followed. On second question on customer acquisition, I'll ask Arief to address this later. On your cohort-level revenue and all that, we do not disclose much on that unless, Amit, do we disclose cohort-level revenue?
Yes, Dinesh bhai. I think you've gotten to slide number 12.
Okay. One second. You can take that later. On break-even impact, we believe that if you look at customers' wallet share, that has not shrunk. Their engagement in this market will in fact going to improve. Except for that temporary phase that we are seeing because of regulatory change and macro getting weak and all that, we are seeing this impact. Otherwise, I believe that you'd be able to maintain this break-even of between six to nine months. Arief, you can take that Customer Acquisition Cost, and then Amit, you can take that cohort level.
Thank you, sir—
If I can just—sir one just follow-up on the employee expense side. If I just understand, I mean, we are broadly running a INR 200 crores to INR 210 crores kind of a run rate in second and third quarter. For the provisioning and basically the number for, say, Q1 onward, should we expect a number higher than that?
Okay. Let Vineet answer this properly. Vineet, if you can take this question.
Yes. Swarnabha, obviously, with the increments and the new variable pay provisions for the current financial year, the numbers will be higher than the previous year. You can take the trend of the previous years and extrapolate these numbers.
Okay. That's helpful. Yeah.
Yes, Arief if you can take that.
Yes, I can. Thank you. Good morning, everyone. Thanks a lot for the question. That's a very, so when I looked at it, the Cost of Acquisition had gone up in JSM across the industry during the couple of channels. Correspondingly, it also went up for us. Our acquisition mix is based on a multiple set of channels, and we have corrected for that mix. We are very confident the COAs will come down as we go forward. We are already seeing the reduction as we get into April. Thank you.
Yeah, sir, just one quick follow-up. This reduction, will it be like what we have seen previously in non-IPL periods or so? Maybe somewhere at the level of Q2 or something? Would that be a fair assumption?
There will be a seasonal mix of IPL being slightly on the higher side, but we see it below last year levels as we go forward.
Understood.
Okay. Amit, you can take the next one.
Yeah. Thank you, Dinesh bhai. Swarnabha, on the cohort-level revenue is the question that you posed. FY 2025 has been an extraordinary year for reasons that we all know. If you observe carefully, you will see that almost for all cohorts, there has been an impact. With respect to FY 2023 in particular that you mentioned, this is just the start of a cohort of customers which has to be allowed some time to stay on the platform for them to start generating revenue. I think what we tried doing here is transparently declare year-over-year cohorts that we have been acquiring and how their behavior has been over a larger period of time. Actually, if you see from year three or year four onwards is when there is consistency of revenue of that particular cohort.
Therefore, in case of FY 2023 and for any other year beyond, we have to allow for a few more years to go by for us to make a very firm assessment around the quality of that cohort. We are not seeing significant challenge so far as cohort acquisition is concerned because our acquisition metrics for cohort-wise acquisition metrics for cohort has been consistent year over year. We have not had a significant change in the way we acquire our customers. On your point on break-even, again, to look at a break-even point for FY 2025 will be very short-term of you. You will have to, again, allow it some time to settle. We continue to believe that when markets are normal and in a cycle of four to five years, you will have periods of abnormal market conditions, either downward or upward.
Therefore, the way to look at this is more long-term and allow the entire cycle of five years to play out. Therefore, that year of FY 2025 break-even is not a number that you should go by in terms of future trends.
Okay, sir. That is very helpful. Just a couple of bookkeeping questions. If you could share the mix between cash intraday and delivery orders among the overall cash orders mix. You used to disclose that earlier, but I think I did not find that in the presentation. Second is, in terms of the new ventures, for example, Ionic Wealth, where is the number reported in our overall revenue mix that we have provided in the gross revenue mix?
Vineet, if you can take that Ionic Wealth , and then Amit, you can check whether we disclose this mix or not.
Yeah.
The new businesses, including asset management, wealth, and distribution, are clubbed under distribution. The 3% revenue that we have disclosed as a constituent of the total revenue, it's included there.
Okay. Sure. On the order mix if you can.
Swarnabha, on the order mix, since now we are charging for both cash delivery and cash intraday, it does not make any difference. We have clubbed it as a cash segment. You can continue to extrapolate those numbers.
Okay. Got it. Thank you so much and all the best.
Thank you.
Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Prayesh Jain with Motilal Oswal Financial Services Limited. Please go ahead.
Yeah. Hi. Just a few questions. Firstly, on the expenses front, again, you mentioned that the Cost of Acquisition has gone up. First of all, could you allude the reasons for the same and how do we see this? You mentioned that it will go down, but if this run rate, even if it sustains or if it kind of goes down by 10% thereabouts, still the margins that we have spoken about in the earlier call, that a long-term sustainable margin of 45%-50% seems to be far-fetched right now. So what kind of trajectory should we think about EBITDA margins from FY 2026? Or as you mentioned that Q4 FY 2026 will be first normal quarter of normal levels. That would be would that mean a 45%-50% EBITDA margin by then?
Would you say FY 2027 will be a year where we should think about that kind of levels? That would be my first question. Second question would be on the Wealth business. You mentioned the presentation of about INR 3,300 million outgrowth of AUM. Could you split it for us as to how much is transactional? How much is in MF, PMS, AIF? What is the color of this book today? Because the size looks pretty good, what is the kind of revenue potential out of this asset on a yearly basis? Third question would be on the MF AP channel. You mentioned that the AUM has been gaining traction. What is the kind of AUM size that you would have achieved in this business?
Last, on loan distribution, you have been able to distribute only about INR 100 crores in this quarter versus about INR 240 crores in the previous quarter. Why this decline and what kind of traction should we see from here? Yeah. Those would be my questions. Thanks.
Okay. Great question. First, on the same expense side, Cost of Acquisition, Arief will take in terms of what does he see in terms of Cost of Acquisition going forward. Let me tell you one thing. See, our model, coming back to margin and all that, Cost of Acquisition, if at all, in certain quarters goes up and down, but still is not as big to change the margin profile of the company altogether. Because even in digital companies, we see Cost of Acquisition to LTV, if it is even five and a half also, you will see margin going beyond 50%.
The person you are speaking with has put your call on hold. Please stay on.
Please go ahead.
Yeah. Okay. I believe that, okay, already what we are seeing is that, okay, there will be some seasonality. There will be some change in terms of pricing in certain channels. We acquire customers from multiple channels. We would like to then focus more on channels which is more viable for us to acquire customers. We are seeing enough channels are available for us to maintain consent growth rate in customer acquisition. In terms of margin, because of these regulatory changes, macro, and lots of things happened in this Q3 and Q4 , what we are seeing is that in terms of revenue curve, we are seeing bottoming up from, say, revenue curve has changed from said, and March, we saw an uptick. As we speak also, we are seeing that revenue curve has taken a turn for better.
Margin expansion, you will see at the exit of quarter four, where again you will see a margin coming back to 40%-45%. Exit of Q4 , we will see again margin coming back, and we again going back to normal kind of productivity metrics, margin, as well as ROE. Yeah, on Wealth Management, if Srikanth or Shobhi , you can take this question.
Yeah. I'll take it , Srikanth here now. Prayesh, t hank you for your question. Happy to sort of answer in a manner that, you know, it's been a year as far as wealth conception is concerned. We actually became fully licensed over the last four or five months. In view of all of that, we own roughly about INR 3,370 crores of actively managed assets. Around 75% of that is in the nature of recording AUM, which means it's a mix of advisory, it's a mix of trail-based distribution businesses, and about 20%-25% of that will be transactional assets. Now, the only reason I will add a caveat for no other reason, but the fact that it's too early for me to project a trend line.
I think the team is experienced enough to know that a good high-quality wealth management business is built when you build a strong annuity income over long periods of time without losing focus on strong tailwinds as far as transactional opportunities are concerned. At this moment, it is close to about three-fourths of this in various portfolio compositions across advisory and trail income, and about 20%-25% would be into transactional assets.
Srikanth, what would be the revenue profit of this INR 3,300 in the sense of what basis points could you be doing it on an annual basis in terms of revenue?
Yeah. Prayesh, at this stage , as I said, I think it's just been about three to four months. We haven't done a full one year of seasoning, but we are fairly in line with what the established best practices in the markets are. Now that we have clearly established benchmarks in terms of what others are in terms of an annual margin, at this point of time, we are fairly in line with that. I would want this to be seasoned a bit more before we start getting into specifics. At this point of time, a very healthy mix of this AUM is into an annually recurring kind of a color.
Yeah. On your AUM on Mutual Fund, already we are building a good AUM on direct as well as B2B, but your question was particularly on AP. I will ask Nishant to answer this. Nishant, you are there? Okay. Let Nishant come in. On loan distribution, if Saurabh, you can take this question.
Yes, on the credit disbursement side, we saw a temporary moderation this quarter due to cautious underwriting in slightly volatile macro conditions. That said, momentum is actually slowly picking up again as confidence is beginning to return and finance are becoming slightly better. Having said that, we are focused on building a strong sustainable lending play with the right partners. The foundation is being laid right now, which positions us well for long-term scale and resilience. Short-term softness is not something that we are really worried about. Also, as I mentioned earlier, last quarter, we have added two bank lenders and a FinTech, right, and built very solid AI/ML models.
The person you are speaking with, has put your call on hold. Please—
AI/ML models on propensity and matching algorithms, right, all moving us towards a very robust future for credit in Angel One. I hope that answers your question.
Yeah. Got that. Thanks.
Okay. Did we get Nishant back?
Yes. The line of Mr. Nishant is connected, but it is going on in the IVR. Let me just reconnect again. Mr. Nishant, again, please go ahead.
Nishant, can you hear me?
Yes, I can.
Can you just give brief on MF fund AUM that we have built in that AP channel?
Sure. With regards to your question, we have grown by about 2.2x with regards to the last financial year in this year. This has been coupled with some of the interventions that we had done in this space, driving Mutual Fund Distributor appointment. We, in fact, acquired over 7,000 Mutual Fund Distributors in this year itself. There were a lot of intelligent cross-sell nudges that we were providing to our users to therefore build traction around SIPs and lump sums. Some of those initiatives have helped us deliver about INR 3,700 crores of AUM as we executed this year.
Got it. Thank you so much.
Thanks.
Thank you. Next question comes from the line of Pradyumna Choudhary with JM Financial Limited . Please go ahead.
Yeah. Hi. Thanks for the opportunity. Two questions. First one is, if I look at your F&O market share, there's been a slight moderation in Q4 compared to Q3. How should we really look at this going forward, given that anyway the market share gain had already slowed down compared to earlier quarters? Similarly, on the commodity side, the last three quarters, we've been seeing a declining market share. How should we really understand this? If you could maybe comment on the players who seem to be taking the incremental market share here. That's the first question.
Okay. Devender, you'd be—please take this question of F&O market share and commodity, who would be the right person to answer that?
I'll take both of them. Hi, Mr. Choudhary. From an F&O market share point of view, we see a slight change. From an overall trajectory point of view, we are seeing incrementally market share gain. We are seeing a temporary break with the F&O regulation changes coming in, which is affecting the retail clients have been particularly harder, where we have a very strong market share. That is respective of that aspect only, which is basically you can see that there is some defect that has happened, and the growth that we have been able to do will continue from there. From a commodities point of view, I think it's more of a composition mix of the commodities market, where traditionally we have a very strong market share in crude oil.
Lately, what has happened is the composition of the market is changing, and crude oil turnover contribution in commodities has gone down. This is what is reflective. We have not really lost any market share. It is more of a composition mix which is reflecting in terms of the overall market share that Angel is having.
Understood. The second question is on the activation rate. One would ideally expect this number to, at certain times, if I compare over the last several years, quarter by quarter, one would expect this number to, at times, go up, especially during a bull run, when you expect maybe the active clients would start growing faster than the total clients. Maybe it decreased during a bear run or a flat market. What we see is it has continuously declined over a two- to three-year period, quarter- on- quarter. Why is this happening? If this is happening, is it even a right metric to look at total client acquisition, given that maybe we are anyway not able to convert a larger chunk incrementally into active ones?
What happens, we need to have a particular base. From that base, a certain amount of customers becomes active. It is not that the person who becomes active, they only remain active. As you rightly said, in bull market, bear market, you will see different kinds of customers becoming active off the base. If base is larger, definitely number of customers getting active in good times and all that would be more. If there is a bear market, lots of people who have opened their accounts, maybe bought some shares, they would like to wait till the time they find a proper opportunity. It is not those accounts are dormant or they are not interested in market. They are opening the app. They are getting engaged in terms of looking at markets and all that. Customer acquisition is important to increase over base.
That's the top of funnel that we get. When market conditions, based on whatever liking customer has, they become active.
Thank you. Mr. Choudhary, please rejoin the queue for more questions. Next question comes from the line of Karan with Jetha Global. Please go ahead.
Can you hear me?
Yeah. I can hear you.
Okay. Great. Hi, team. Thanks for that. Thanks for the update, and hopefully returning the call anyway. I want to just address the multi-sort of vertical strategy here because you're setting yourself up for hopefully very durable growth. I'm pretty curious to hear from the new CEO on what is his assessment of the Tech Stack. If he had to rate it, if he had to grade Angel One's Tech Stack today, maybe on a scale of 1 to 10, where is Angel One? What's the plan there in terms of getting the Tech Stack to a place where you can obviously sell these products and it's seamless for the customer and all of that? Are we already there, or is there a lot more work required?
I guess a broader question is, if you look at the materials, these calculations on cohorts and LTV and paybacks, they only consider one product or maybe one and a half products in terms of what the customer is doing. Can you give us a sense of a customer who has actually engaged with many of these other products? Maybe they are using three or four of your products. They have bought an ETF. They have bought an insurance policy. They have taken a loan. They are buying and selling derivatives. What does that look like? Ultimately, if you are paying higher CAC, are you underwriting that these customers are going to eventually subscribe to more than one product? How are you bringing it all together in terms of products per customer? How do you want to look at it?
Okay. I will take two questions. Later on, first, and on Tech Stack and all that, I will ask Ambarish to come in. In terms of cohort, LTV, and all that, currently, our calculation is based on revenue that we get from broking services and aligned services. We are new in terms of getting into other products like Mutual Fund, loan business, and all that. We are still in the process of building up and gaining some good market share. Going forward, definitely all that revenue from this customer, from all the services, will be incorporated. On higher CAC, it is just, I think, a temporary phase. Right now, we are not targeting higher CAC based on revenue from other verticals because we feel that we have enough base and we are able toc attract enough clients who can justify their CAC based on broking revenue.
As we get more detail and data on revenue from other products, definitely would like to acquire customers at higher cost. That is broadly our strategy that going forward, we want to be a platform company where we are able to sell multiple products and then see what the revenue we can get from this customer and what is the lifetime value. Based on that, we can increase our cost to acquire the same customer. Ambarish, if you can take that Tech Stack question.
Yeah. Thanks, DT, and thank you, Karan, for the question. I'm actually very pleased with the shape of the Tech Stack at Angel One across the board, across products that you see. In fact, if you look at Angel One, it's the only company that's kept up with the times really across the board and continuing to evolve. The Tech Stack is in phenomenal shape. That said, I think it's a continuous process. You have to continuously evolve with the times. The good news is we have a phenomenal team. DT talked about Rohit joining the team, but we have a phenomenal set of leaders across the board who are continuing to stay up with the times. You are also going to see more investment, as we have talked about, in Artificial Intelligence and that being inflection point. That will continue.
To your question, the Tech Stack is in a phenomenal shape, is able to handle a large amount of volume, a large amount of features, and keep up with all the compliances as well. Thank you.
All right. Thank you.
Karan, are you done with the question?
Yes, I'm done. Thank you.
Thank you.
Thank you. Next question comes from the line of Abhijeet Sakhare with Kotak Securities. Please go ahead.
Yeah. Hi. Good morning, everyone. My first question was, wanted to get a sense of the customers that we've acquired in the recent quarter because this is coming with a new set of, under a new set of regulations. Wanted to understand if this set, is this cohort behaving very differently in terms of activation rate or the first products that they played with. A related question would be, how has the competitive intensity been in terms of customer acquisition during this quarter? Second question is just to go back to the previous question to AK, which is that if he could talk about a few areas where he believes, where he thinks he can make a decent sort of intervention or impact on the current business because he comes with a financial services background plus a consumer background.
Angel, in a way, kind of is a mix of both. Are there any areas where we can see some major shifts based on his experience?
Okay. Sure. DK, if you can take this quality of customer that has been acquired after regulatory changes. Let me just answer in terms of competitive intensity. I think that is not an issue because we are gaining market share. It seems that whatever we are doing in terms of efficiency, it is better than competition. Currently, any kind of element which is coming from competition is not really a concern. In fact, we are looking at how do we delight our customer in a far better way than what competition is doing. DK, you can take this customer quality. Arief, if you want to add on this competitive intensity first.
Yeah. Thanks, Dinesh bhai. Right. Yeah. Hi, Abhijeet, f rom an overall point of view, the customer profile remains overall pretty same as what we've been acquiring in Q2 and Q3 . What impact we have seen on the overall industry is also similarly applicable to the new clients. That is there as well. I believe that as the consumer behavior evolves, some of the product segments have gone away. Our belief still stands hold. The wallet share that we have been able to take care will continue to elongate, and we'll see these impacts coming in the next two quarters where the behaviors will evolve. That's what the belief is. From a competitive intensity, I think, Arief, do you want to put some words?
Yeah. Yeah. Thanks a lot for the question. On the competition intensity, I would say that our read is that there's a lot of wait- and- watch that is happening in general across the industry. We feel that this is also a good time for us to be staying aggressive and acquiring clients, right? Also to kind of add on to what DK mentioned, see, bearish and bullish markets might have an impact on the immediate activation. Once you acquire a client, they are an asset that will keep adding to the growth. The activation might take a slightly longer gestation, but they will return back. The goodness for us is how we look at it.
Thank you. Ambarish, if you can take that, your final question.
Yeah. Thank you for that question. I think any leader coming in, as you would understand, has to, of course, enable the team, and that's the most critical thing. I see a fantastic team already in place and moving in the right direction. What you're going to see is that I'm going to enable and be a multiplier for that. That said, a few areas that I have in mind and you will see happen is number one, I think, as we do more product diversification, we have lending, insurance, other things that you see around us, how do we bring all of these things together and make it better for the customer and create a fantastic place for financial services platform for people to come in there? That's a very important part of it. How do you sort of bring it all together?
Number two, I think you will see a bunch of chat from me on AI, also Artificial Intelligence and Machine Learning as we continue this conversation. You are going to see a few areas where it is going to impact, right? Number one, it is going to have an impact on what you see built into our product model's personalization. You are going to see an AI impact on that. Number two, you are going to see an impact on how we produce those products. Are we doing code generation using AI? Are we building our UX through AI, stuff like that? You are also going to see that impact, and it is already starting to happen, our processes and how we are using AI tools internally to improve our processes, making them both efficient and effective.
In the long term, you're also going to see us getting smarter using AI, just use it for learning and other things. Now, this is not all going to happen next quarter, right? It is a journey that we'll continue on, and we'll continue that conversation. The last thing I'd mention is that we would also get better at its evolution, but get better at reading signals from the customers, understanding them better, and creating better, more delightful journeys for them as we acquire them as well as take them through our product. Thank you.
Mr. Sakhare, are you done with the questions?
Oh, yes. Thanks. That was useful.
Thank you.
Thank you. Next question comes from the line of Ajox Frederick with Sundaram Mutual Funds. Please go ahead.
Hi. Hi, sir. Thanks for the opportunity. Sir, you have mentioned that the impact of new businesses on your cost is 1.8% for the full year. Can you help me understand what was the quantum in Q4?
Vineet, if you can take this question.
Sorry. Can you just repeat the question? What was the quantum? I couldn't get the last bit.
Yeah. The quantum, which was on account of incubating new businesses, the expenses, basically, in Q4.
Yeah. The net burn in Q4 was about INR 60-63 crores for these two new businesses, which is the Asset Management and Wealth Management, which translates to about 1.8% of the operating margin overall.
I'm assuming that's for the full year, right?
No, this is the— yes, full year. Yeah, full year. I think it was about— yeah, I mean, it's 1.8%.
Okay, sir. Secondly, sir, you also mentioned that you have confidence of bringing down COA eventually. What indicators are we seeing out there to bring down the Cost of Acquisition?
Arief, you can take this question.
Yeah, DT. It is not— just to correct that. It is not about getting the COA down eventually. Whatever increase that we saw in JFM, we have corrected for our mix. We are already seeing that Cost of Acquisition coming down even for this month. It is not about an eventual scenario. We are already there.
Yeah. In this Cost of Acquisition, what is important is that, as I always said, okay, what is the Lifetime Value of a customer and which pockets can we get into to get more market share? Always our focus would not be on reducing any kind of cost when it comes to acquiring customers. It is more about getting quality customers for whatever kind of geography we're acquiring. In JFM, what happened was a temporary kind of bit upside. What we are talking about, we'll get back to the normal trajectory. As we see more revenue coming from the same customer, because we are getting into multiple products, if we see we are able to sell more product than just broking, definitely it makes sense for us to even increase our Cost of Acquisition. We are constantly monitoring what the Cost of Acquisition and what kind of activity we see on customer on our platform.
Thank you. Mr. Frederick, please return to the queue for more questions.
Thank you.
Next question comes from the line of Nidhesh Jain with Investec. Please go ahead.
Thanks for the opportunity. The first question is on the possibility of price hike. That is completely off the table, or that is still under consideration, given that we have already seen three, four months of customer behavior after the regulations?
Nidhesh, we have to watch in terms of because there are lots of things which happened in this quarter, as last time I told. We have to wait for one or two quarters to say that what is the behavior of customers for these regulatory changes. Initial sense, what I'm getting is that, okay, we would be back to normal kind of margins by exit of Q4 . Till the time, it is not necessary for us to look into prices. We would like to maintain this price. Initial kind of signs what I am seeing in terms of, as I said, that revenue has almost bottomed out, and we are seeing revenue kind of improving since March. We would like to monitor this situation for two quarters before we take a stand on price.
With price, I feel customers are not sensitive, but we want to maintain this price if we are confident that we will be able to get to this margin what we will be comfortable. That is the range of 40%-50% in a few quarters. Stand would be wait for a few quarters. Change the behavior of customers. As I said, there are lots of products that we are introducing. Look at margins, what we'll get from customers that we have and we have acquired. If we are confident that in a few quarters, we will be able to bounce back to a margin of 40%-45%, we would be comfortable focusing on increasing more customers on this platform. See, digital company has to look at how many more customers we can serve on a similar platform.
Till the time we are seeing customer acquisition rate is very high, we would like to pause and check and take a call only if it is necessary.
Sure, sir. Understood. The second question is that we have started as a digital broking business, then we are now doing a lot of things on the financial management side for the client. Do we also think that there is a possibility of entering into other financial service areas, specifically on the transaction, payments, credit card side, to become a holistic financial services platform over a medium-term perspective?
See, currently, our focus is to be a distributor for all the services. So whatever services the user wants and where we can extend our platform, we will do that. AK, you want to say something on this?
No, I think that makes absolute sense. I think we've got a platform that we've got tons of customers coming here. We are already doing, of course, you talked about AMC investment, but we are doing lending, insurance, of course, broking very big. Those are all just the right things. We will continue to distribute any financial products that we can on a platform. Think of it as a platform.
Yeah. Thank you.
Thank you. Mr. Jain, please return to the queue for more questions. Next question comes from the line of Vikram Raghavan with Moon Capital. Please go ahead.
Thank you for the opportunity. Just one question. What is the percentage of revenue expected from new businesses over the next, say, one, three, and five years? Thank you.
Yeah. We believe these new businesses, especially distribution of credit, insurance, and particularly Wealth Management, can really substantially grow at a good size if we give proper time and focus on that. That is our focus, how to become leader in all this kind of vertical. To give a time frame in terms of what the percentage of revenue mix will happen in the next few years would be difficult to predict because even broking is expected to grow at a very high rate for the next 15-20 years. Even if you are able to grow other lines of businesses, to give a kind of call in terms of what's the percentage revenue that we'll get from other businesses in the next three, five years, it's a very dynamic call because we have to keep something constant.
When all these verticals are growing at a good rate, I can tell you one thing, that our aim is whichever vertical we want to get into, we want to achieve leadership position. In any other vertical that we have gone, apart from broking, broking definitely, our aim is that we are leaders. We would like to be leaders in that in the next three to five years.
Thank you, sir.
Thank you.
Thank you. Next question comes from the line of Aman Dugar with Nuvama Wealth. Please go ahead.
Hello. Hi. This is Madhukar Ladha here from Nuvama. I do not know whether this question was addressed or not. The total staff cost for the year is about INR 8.55 billion. In Q4, there has been a little bit of a reversal in variable cost. Can you spell out what is the total fixed and variable staff cost for the entire year? That is just one thing that I would like to know. Thanks.
Vineet, you can take this question.
Yeah. Thank you, Madhukar, for this question. We do not really disclose the entire variable. As we said, we have reversed a large part of our variable cost in this year. You can extrapolate the number based on that. Of course, there is a little bit of variable pay that we give to some of our other junior-level employees.
Right. Okay. Okay. Thank you.
Thank you.
Thank you. Next question comes from the line of Sanketh Godha with Avendus Spark Please go ahead.
Yes. Thank you for the opportunity. Basically, the question is that your March saw an increment in the number of orders per day to 5.4 million. I just want to understand in April how you are seeing the trend. Actually, in the full year, you were at 6.9 million orders per day in FY2025. I just wanted to understand, are you decently confident that for FY2026, the number of orders for the full year or by exit, at least, you will claw back to 6.9 million orders per day? That is the first question I had. The second question was that, sir, in the fourth quarter, your margins were at around 32%. I believe in the first quarter of FY2026, it will be more impacted maybe because of higher IPL cost allocated to that quarter.
From the residual nine months of the next year to even deliver 41% EBITDA margin, you should be maybe closer to 45% plus or maybe closer to 50%. I just wanted to understand what are the levers you might be having other than maybe cost-cutting exercise to deliver EBITDA margin at least similar to what you have delivered in FY2025. Those are two of my questions. If you can give little number-related things, it will be really useful.
Yeah. See, we always take numbers based on averages of what industry has delivered. To take a call on one month or one quarter would be difficult. What we believe is that factors which are impacting, create dullness in market, are getting resolved. Macros of India, as you see, interest rates are coming down. That will bring in more customers to the equity market. Our belief is based on averages that we see for three years, five years, and all that. Based on, we understand that customers what we have acquired will become as active as they were maybe in Q2 of last year. To give a call that, okay, whether it is going to improve in a few months or one or two quarters would be difficult.
As you rightly said, that, okay, we can take a call that by exit of this financial year, we will be able to acquire a certain amount of customers. We believe the activation ratio of this customer would be at a certain point. Based on that, we are confident that by exit of quarter four, again, we will see margins coming back to this. To comment on Q1 one -time cost, the IPL cost is a cost which has to be kind of which will give us more visibility, more recall. When we talk about Indian youth coming to this market for next five years, 10 years, 20 years, we should think about Angel One as a preferred kind of platform company. This cost, I think we should look at a bit medium- to- long-term horizon.
Although we have to book it in that quarter itself, I would say it is something like earning before this IPL, which should matter to all the analysts. The benefit that we get from IPL is a bit medium to long-term. We are confident that we'll be able to achieve a good margin kind of exit of Q4 . We are not looking at cost-cutting. We are focused on growth. We believe by exit of Q4 , you will see lots of other verticals where we have started investing will contribute to the revenue. It may not be to profits. What is important is that, okay, slowly their burn rate and their focus on being a leader and all that is going to ultimately generate more revenue from per customer that we acquire.
We are very confident by exit of Q4 , we will see everything would be almost to normal what we used to see in this industry. Plus, as a digital company, there is a fixed cost that we have to take to build the platform. Incremental customers that we acquire, margin from that incremental customer is very high. We are very confident to look at the growth rate of acquisition that we are getting, even in bad market where we never knew how do we acquire customers, how do we react when there is a big regulatory changes. Now that everything has stabilized versus behind us, we will again work out a proper growth strategy where we are able to acquire more customers, which will lead to expansion in market. By exit of Q4 , yeah.
Got it. So basically, you are decently confident that by the end of the fourth quarter, you will get to 45%-50% kind of a margin which we usually used to operate in that case?
We can say 40%-45%. Exit of quarter four. And it will expand as we move to the next financial year.
Thank you. Mr. Godha, please return to the queue for more questions. Next question comes from the line of Swechha Jain with Whitestone Financial Advisors. Please go ahead.
Hi, sir. Thanks for giving me this opportunity. I have two questions. My first question is, when we distribute these third-party products, I just want to know how much do we get as a part of commission or whatever, how much do we make on this? The second thing that I wanted to know is if you could share how much revenue have we made in this quarter from distributing the products other than the broking revenue, so products from AMC, revenue from the AMC, Wealth Management, credit distribution, and insurance. If you could just give me that.
Can you take this question based on whatever you disclose?
Yeah. The percentage of revenue that we have earned from the distribution part of the business, which includes the distribution of credit products, insurance, the asset management, and the wealth management businesses, is about 3% of the revenue.
All our revenue. This is Q4, right?
Yes.
Okay. Okay. Fair enough. When we distribute the third-party products, how much typically we make on that?
In general, if you take this.
Sure. Sure. In general, for most products, I think we make in line with the industry, be it credit or insurance, right? For Mutual Funds, since we largely do direct at one part of the business, there it is zero commission. For the regular part, we make in line with the industry again.
Thank you. Ms. Jain, please return to the queue for more questions. Next question comes from the line of Bhuvnesh Garg with Magma Ventures. Please go ahead.
Yeah. Thank you for the opportunity, sir. Just a couple of data-seeking questions. Firstly, if you can mention the ESOP cost for Q4 and how it would look like in FY2026 and FY2027.
Yeah. Vineet, if you can take this question.
Yeah. The cost for stock options has been in the range of about INR 350 million-INR 380 million quarter on quarter. Overall, for the entire year, it is in the range of about INR 1.05 billion. Next year, based on the grants that we are going to do now, the cost is going to increase. I will come back with the number maybe in the first quarter once we have the grants in place.
Okay. Sure. Sure. Second question is on growth and broking revenue per order. If I see it was flat quarter on quarter, but I understand that we start charging on delivery orders from mid-November onwards. Basically, Q4 would be the full quarter where there should be the full impact of the charges on delivery order. Still, the revenue was flat per order was flat Q-o-Q. If you can just explain what was the reason for this?
DK, you can take this question.
Yeah. Hi Mr. Garg. At an overall level now, the macro of the industry has been subdued in quarter four, which has impacted. What I see is more of a play of the composition mix of various segments that has kept it flat and the macro conditions, which we believe in the coming time will recover. It is just a macro aspect.
Thank you. Mr. Garg, please return to the queue for more questions. Next question comes from the line of Ajay Nandanwar with Blue Argon Capital. Please go ahead.
Good afternoon, sir. Thanks for the opportunity. Quick question on your future growth areas. What's the opportunity you see in distribution from a customer perspective and from your right-selling perspective?
Saurabh, would you like to take this question?
I'd actually want to hear that question once again, please.
Sure, of course. You mentioned that you want to focus on distribution with a growth area going forward. I'm trying to understand what do you see as the opportunity market from customer's perspective and from your sort of competitive advantage perspective?
Yeah. Sure. Great question. I mean, if we take one area at a time, if we just take credit, which is the key focus area, unsecured credit over the last three, four years has grown massively. We would have seen close to INR 6 lakh crores to INR 8 lakh crores of PL being distributed in the market over a one-year time frame itself, right? The size of the opportunity and that too growing at close to 20% CAGR over the last three, four years. Over the next four to five years, we might look at close to an INR 20 lakh crores annual offtake in PL in India, right? Even if we look at, say, a 1% market share, that is INR 20,000 crores of PL being distributed. That is the size of the opportunity that we look at only from an unsecured credit and PL perspective.
There will be more growth areas that will enter over time in credit, be it on the unsecured side or the secured side, as and when we deem fit. Even on the insurance side, if you see digital penetration, as of now, it is still very poor. With the large regulatory push from IRDA to have more penetration, this size of the business will also keep on growing. I think both these areas, be it insurance or credit, we are very bullish that they can become very sizable business over the next three to five years.
Yeah. Apart from that, even Mutual Fund, AUM, and wealth distribution and all that, all that verticals are very promising.
I don't doubt you find the opportunity. My question is more about what is Angel's competitive advantage in that space? We have been a broking house for a long time. What are some of the differentiators when it comes to distributing non-traditional markets?
Saurabh, would you like to answer? Let me just cover this, then I'll give it to you. The main advantage is that we have built an excellent platform where customers are really loving to buy more products. Our Cost of Acquisition becomes limited. If you're able to sell incremental products, definitely, that makes a big sense for us. Even for customers, it makes sense that they are buying all the products from the same platform. That is where we have invested on tech, and we have created a big kind of a team who have created a very delightful kind of an experience on this platform. That makes a very kind of a user-friendly platform for a user who is coming for one product and buying multiple products. Yeah. Sorry for overtaking.
Just to add to what DT said, I think there are two or three large levers. One, the customer quality that we see on our platform is substantially good, right? The second is the engagement of the customers on the platform is higher than a lot of other consumer platforms in the country. The third is the amount of time that they spend on our platform gives us a lot of handle on their data, right? These are three large levers that enable us and have clear competitive moat with respect to others who are doing plain manila distribution for their customers.
One more question, if I could. On the client funding book, what's the yield on assets? You have around INR 38,050—sorry, INR 3,850 crores asset book. What's the yield on it at this point?
Vineet, you can take this.
Yeah. We levy an interest of 14.99% on MTF.
If I look at the interest income, it seems much higher. It's INR 348 crores. Is there something else there?
Yeah. This interest revenue line item comprises of two components. One is the margin trading interest from margin trading funding, and the other is interest from deposits that we place with the exchanges.
Thank you so much. Thank you.
Thank you. Ladies and gentlemen, due to time constraint, that will be the last question. I would now like to hand the conference over to Mr. Dinesh Thakkar for closing comments.
Thank you for joining us on the call today. I hope we have answered your queries satisfactorily. Should you require any assistance, please feel free to contact Hitul Gutka, Head of Investor Relations, or SGA, our Investor Relations Advisor. Have a good day.
Thank you. On behalf of Angel One Limited, that concludes this conference. Thank you for joining us. You may now disconnect.