Ladies and gentlemen, good day and welcome to the Q2 FY26 earnings conference call hosted by Angel One. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations the company has 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 touch-tone phone. I now hand the conference over to Mr. Hitul Gutka from Angel One. Thank you, and over to you, Mr. Gutka.
Good morning and welcome, everyone. Thank you for joining us today to discuss Angel One's Q2 FY26 financial and business performance. The recording of today's earnings call and the 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, CEO, New Business, Srikanth Subramanian, Co-Founder of Ionic Wealth, Hemen Bhatia, CEO, AMC. 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 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 the brief introduction, I now invite Mr. Dinesh Thakkar for his opening remarks.
Thank you, Hitul. Good morning, everyone, and thank you for taking the time to join us today. It is great to connect with all of you again and to share how we see the opportunity ahead. After my remarks, the team will take you through our performance highlights. India continues to stand out as one of the world's most resilient and fastest-growing economies. Its strengths: a young, digital-first population, steady formalization, and a strong policy momentum give it a solid foundation for long-term growth. Recent government reforms, especially in personal income tax and GST rationalization, are timely and meaningful. They put more money in people's hands, simplify compliance, and encourage consumption. Over time, that means higher saving and more investment in financial assets. We believe we are at the start of multi-year expansion across investing, wealth management, protection, credit, and fixed income.
The last five years have already shown the early signs of this shift. India's adoption of digital financial solutions, including equities, mutual funds, credit, and insurance, has grown rapidly. Fintechs are at the center of this transformation. They are opening up access, removing friction, creating experiences that are simpler, smarter, and more inclusive. By using AI, data, and automation, fintech platforms are changing the way India invests, borrows, and builds wealth. At Angel One, our AI-powered platform continues to bridge the gap between formal and informal financial worlds, expanding our reach and offering a personalized journey at scale. Our vision remains clear: to touch a billion lives and serve their financial needs through one integrated digital ecosystem. Today, nearly 90% of our clients come from beyond the metros and Tier 1 cities, which is a strong reflection of how deeply we are reaching into Bharat.
Our platform now goes well beyond equity broking. We are steadily adding more products, and some of these are beginning to generate annuity revenue. Long-term wealth creation is being announced through mutual funds and other emerging wealth products. You can see this shift across the industry as well. India's SIP inflows reached over INR 290 billion in September 2025, the highest ever, compared to a monthly average of INR 85 billion just five years ago. With innovations like MF Lite, Choti SIP, and Specialized Investment Funds (SIF) expanding participation, our asset management business is well-placed to capture a growing wallet share. On the credit side, Fintech-led models like ours are improving discovery, underwriting, and delivery. Using alternate data and behavioral analytics, we are making credit distribution more efficient, responsible, and inclusive.
As a part of our broader strategy to strengthen our presence across financial services, we have also entered into a joint venture with LiveWell Holding Company (Pte.) Limited. Together, we are launching a digital-led pure protection life insurance offering tailored for India. This partnership combines LiveWell insurance expertise with our technology, data, and consumer insights, allowing us to shape the future of protection in India. Our goal is to reimagine how protection is delivered. With smarter underwriting and seamless claim, we build entirely a strong digital foundation. While this is a collaborative venture, it gives us the opportunity to influence product design, embed protection within our platform, and deliver solutions that are proactive and personalized, not one size fits all. Angel One will hold a 26% stake in this INR 4 billion joint venture, subject to regulatory approvals.
It is a partnership built on trust and credibility, and it positions us to capture a significant disruption opportunity. We are methodically building out every aspect of our customers' financial needs: wealth, credit, and protection, each with a long-term view. These businesses take time to mature, so we have invested early in AMC and wealth in 2024 and in credit in 2025. This gives each line the time and space to compound meaningfully over time. At tht heart of all this progress is our data-driven intelligence layer. It powers smarter products, sharper segmentation, and deeper client engagement. We are constantly using these insights to design better journey and improve efficiency, and we are seeing strong traction. Our platform keeps evolving to stay simple, intuitive, and personalized for every user. Looking ahead, the tailwinds are unmistakably from a young, ambitious population, rising affluence, and forward-looking regulatory framework.
Angel One is uniquely positioned to lead this Fintech evolution and shape how Indians participate in the financial economy. It's encouraging to see regulators adopting a balanced, progressive approach, one that supports innovation while keeping the ecosystem healthy and resilient. This strengthens market confidence and reinforces the long-term potential we all see. The opportunity before us is immense, and as always, we will approach it with the same discipline, innovation, and client-first mindset that has brought us so far. Thank you for your continued trust and confidence in Angel One. I will now hand it over to Ambarish.
Thank you, Dinesh. Good morning, everyone. Thank you for joining us on the call today. At Angel One, we continue to invest deeply in building stronger client affinity with our platform, powered by next-generation technology and relentless focus on experience. As I had mentioned in our previous quarter's earnings call, AI is central to this continuous transformation, helping us improve speed, accuracy, and achieve efficiencies. I am very happy to share the launch of our AI-powered chatbot, Ask Angel, which has been developed in-house using open-source LLM models. It has quickly become a key digital touchpoint, delivering fast and reliable query resolution across mutual funds and equities. Clients can simply type in their queries or use contextual widgets to receive precise and personalized responses.
The chatbot's architecture leverages our proprietary agentic AI framework, and the results have been exceptional, with over 80% of the users resolving their queries without escalation and a 67% reduction in resolution time for 95% of the cases. We are also responding to a significant percentage of support emails using AI. This is AI at work, creating tangible impact and client delight. Over time, Ask Angel will extend across our full product suite. We have also removed friction across client journeys. The launch of our cross-widget discovery engine now enables seamless navigation across mutual funds, loans, commodities, and ETFs. For our channel partners, we have enhanced the NXT platform, offering them unified revenue views, discovery of smart advisory, and client group monitoring for sharper portfolio oversight. These immersive experiences are driving stronger retention, deeper, and more meaningful engagement, and expanding lifetime value.
Our operating metrics validate the positive momentum these efforts are yielding, despite headwinds like fluid global geopolitical situations and softer market conditions at home and a phase of constructive regulatory evolution. As we've always believed, a strong, well-regulated ecosystem builds resilience, and businesses that stay focused on solving the real pain points of retail consumers thrive over the long term. Our client base crossed 34 million, with over 1.7 million new clients this quarter, higher by 12.2% sequentially. Our DMART market share rose to 16.5%, and overall retail equity turnover market share increased by 71 basis points to 20.5%, reaffirming the quality of our franchise. Average client funding book touched INR 53 billion, and clients executed over 360 million orders this quarter.
Our efforts of engaging better with clients for the mutual fund product continue to deliver stellar growth, as we registered nearly 2.4 million new SIPs, a growth of nearly 24% sequentially, and strengthened our position as the second-largest player in incremental SIPs. Mutual funds are a great engagement product, with over three million clients having purchased it on our platform. 40% of these clients got activated through the mutual fund product itself, and nearly half of this cohort also invests in equities, showcasing the cross-pollination power of our platform. Credit adoption is also accelerating, with nearly INR 4.6 billion disbursed this quarter, up 97% sequentially, translating into an annual run rate of INR 18 billion, underscoring client confidence and platform stickiness. We are encouraged by the calibrated regulatory environment, which continues to foster innovation while ensuring market stability.
Our proactive approach to compliance, data privacy, and AI governance keeps us well-prepared for both current and future regulatory requirements. We are equally excited about our emerging growth engines. Ionic Wealth continues to expand its AUM to over INR 61 billion from more than 1,250 clients, while our asset management business has launched its first commodity fund, scaling folios to nearly INR 1.4 lakhs, with INR 4 billion in assets within a short span of time. We are excited to announce that we will set up a branch in GIFT City, a strategic move that opens up new growth avenues. This will be subject to regulatory and statutory approvals. We are scaling every product line with discipline and precision. What we are building is not just a digital platform, but it is a long-term relationship founded on trust, intelligence, and reliability.
With our expanding product universe, deep AI capabilities, and a unified digital ecosystem, Angel One is positioned to lead India's Fintech transformation, reimagining how millions of Indians invest, borrow, and build wealth. Our journey has only begun, and our focus remains on building for the long term with technology, trust, and transparency at the heart of everything we do. I now invite Saurabh to provide further updates on the emerging growth verticals.
Thank you, AK. Good morning, everyone. It's great to have you with us. This quarter, we sharpened focus and executed with rigor, empowering clients to plan, manage, and grow their finances seamlessly. Most users begin with investing and then naturally expand into credit, protection, and savings. From checking credit scores, tracking challans, comparing insurance prices, viewing consolidated portfolios, to investing in mutual funds or FDs, everything now lives in one intuitive interface. Each feature deepens trust, strengthens engagement, and makes Angel One the financial home screen for millions of Indians. That's our flywheel: usefulness to drive trust, trust to drive depth, and depth to drive growth. Starting with credit, credit continues to be one of our most exciting and strategic verticals. Disbursals rose sharply from INR 2.3 billion last quarter to INR 4.6 billion this quarter, taking the cumulative disbursals to nearly INR 14 billion.
We also onboarded another lending partner, taking the total to seven, spanning multiple ROI and ticket-sized segments, allowing us to serve a wider range of customers. While disbursals grew 2.4x year on year, only a small fraction of our customers have taken credit so far. The headroom is massive, both within our base and in the market. To put things in perspective, our users alone took over INR 1 trillion of personal loans from the open market last year, and when we include secured categories, the opportunity becomes even larger. We are hence strengthening our partner enablement, right from equipping them to underwrite better using richer intelligence, enabling greater collection efficiency to operational prudence. While we do not assume any credit or collection risk ourselves, our frameworks and insights help lending partners achieve superior efficiency in managing these aspects.
When partners manage risk better, lower their OpEx, and improve collections, we create tangible value for them, and that value naturally accrues back to us. This foundation positions us to operate at one of the most efficient and profitable take rates in the industry. Our platform economics are strong today, and with deeper data loops, this advantage will only widen. Our aim is simple: to become the most trusted and performance-driven credit platform in the country and achieve a leadership position in the coming years. On the mutual fund front, India's mutual fund industry continues to expand rapidly, with AUM growing from around INR 67 trillion in September 2024 to over INR 75 trillion in September 2025. We continue to do well here. Our own AUM has grown from nearly INR 8,700 crores to over INR 15,000 crores now, with continued gains in the direct SIP market share.
Over three million customers have engaged with our MF offering, and repeat SIP participation continues to rise, reinforcing the trust users place in us. Mutual funds are central to our engagement flywheel. They build lasting habits and strengthen platform retention. SIP customers show deeper participation across other categories, and our focus remains on making these journeys simpler, faster, and more intuitive. On insurance, we are focused on improving both discovery and buying experience through sharper targeting and omnichannel reach. The business continues to see decent traction, and data science-led models are improving funnel efficiency. Overall, our focus remains clear: expand reach, deepen engagement, and monetize with discipline. With that, I'll hand it over to Srikanth to walk you through the wealth business. Thank you.
Thank you, Saurabh, and good morning, everyone. If India's asset management industry was formalized over the last decade, then the coming decade will do the same for wealth management. We in India are at the cusp of creating a large and profitable ecosystem, much like what the West witnessed during its own phase of financial deepening. At Ionic Wealth, we are seeing positive traction of our omnichannel hypothesis. Since our inception in 2024, we have reached an AUM of INR 61 billion, with 1,250+ clients across nine cities. This shows that deep domain, combined with a tech-led platform, is key to capturing the unfolding wealth management opportunity. Our UHNI business, defined as servicing clients above INR 25 crores, remains our growth engine, with several large mandates from marquee Indian families and entrepreneurs.
We are deepening wallet share with high-conviction research, product ideas, and diversification across global markets and commodities to deliver strong returns for our clients. Our Wealth Elite business, defined as one to INR 25 crore segment, we are seeing strong validation of our omnichannel proposition. Our investment in digital capabilities is translating into productivity gains and in driving scale. Next week, we are launching our Ionic Agent for our clients, an AI-powered feature to review portfolios, plan goals, and explore investments. Today, we have a team of over 200 professionals, including 85 in the client-facing team, 40 tech engineers, and 29 domain experts across fund management, product, and research. Our alternate AMC vertical has also kicked off well, particularly with our GIFT City-based Global Innovation Fund. To prepare for fast-changing trends, we do so by future-proofing client portfolios with themes around tech and innovation-led investment opportunities, commodities, global diversification, and quantitative strategies.
With these pillars in place, we are trying to not just respond to the trends. We are almost anticipating them. To conclude, I'll share a quick summary of our market views from our monthly newsletter, AssetX. We have a positive view on precious metals, select global emerging markets, whereas in India, our focus continues on the ongoing season. Thank you, and with this, I pass the baton on to Hemen.
Good morning, everyone. I'm delighted to share that our asset management business continues to build strong momentum. The business, in many ways, is reflective of the growing understanding of financial assets, digital empowerment, and the benefits of long-term and disciplined investing. Continuing with our strong pace of launches from Q1 FY26, we introduced two new offerings in the commodity segment: Angel One Gold ETF and Angel One Gold ETF Fund of Funds. With these offerings, our product bouquet now includes seven schemes across equities, debt, and commodities, each thoughtfully designed to cater to different investor goals with simplicity and transparency. What's truly encouraging is the growing investor engagement. Our AUM now stands at INR 4 billion, spread across nearly 1.4 lakh folios, reaching investors in over 15,700 PIN codes. This isn't just scale. It's inclusion. Passive investing, once niche, is now resonating across Bharat. The transformation did not happen by chance.
It is a result of our consistent focus on investor education, on making finance simpler and not intimidating. Through digital content, vernacular videos, and social media, we are demystifying passive investing, thereby helping investors to stay disciplined and long-term focused. Alongside our digital-first approach, we are also leveraging our captive distribution franchise along with the host of third-party digital and offline partners, enabling us to connect with investors across channels, from first-time savers to seasoned wealth builders. At the core of this journey lies our guiding philosophy: simplicity, transparency, and scalability. Passive investing represents a structural shift in the way Indians diversify their investments to include low-cost, bias-free wealth creation. As we look ahead, the momentum is only set to gather speed. India's passive investing landscape is entering a golden decade. Fintech-led investing is unlocking access, trust, and transparency at scale, thus deepening adoption of such financial assets.
At Angel One AMC, our vision is very clear: to be at the forefront of this transformation. We are not just building products. We are creating habits of making investing simple, accessible, and rewarding for every Indian. I will now pause and invite Vineet to take you through the financial performance for this quarter. Thank you.
Thank you, Hemen. Good morning, everyone. Quarter two of financial year 2026 has been a healthy performance as we delivered on our operating and financial KPIs despite macro headwinds. Our gross revenues increased by 5.3% quarter on quarter to INR 12 billion, while our net revenues grew by 5.6% quarter on quarter to INR 9.4 billion. 46% of our gross revenues came from broking commissions in the F&O segment, followed by 8% from the cash segment and 6% from commodity derivative segment. Interest income from client funding book and fixed deposits with clearing corporations accounted for nearly 32% of our total gross income. The balance came from depository operations, distribution, wealth, and asset management businesses. After commissions paid to our authorized persons, the net broking income grew by 5.4% quarter on quarter to INR 5.5 billion.
The share of direct business in net broking revenue expanded by 84 basis points to 77%, underscoring the strength and scalability of our digital platform. Our client funding book reached a new high, averaging at INR 53 billion in the quarter, up 26.1% quarter on quarter, driving a 6.5% rise in total interest income to INR 3.8 billion. Our finance cost increased by 12.4% quarter on quarter to INR 932 million, pursuant to increase in the borrowings to finance this higher client funding book, partially offset by reduction in the average borrowing rate. As a result, net interest income grew by 4.6% quarter on quarter to nearly INR 2.9 billion. Our income from depository operations decreased by 4.3% due to lower volumes.
Our distribution income witnessed a very strong growth of nearly 28% during the quarter, driven by nearly twofold jump in sale of credit products, robust IPO market, and sustained growth in mutual funds through our SIP channel. Our employee cost, including ESOPs, remained stable at INR 2.7 billion during the quarter. Other expenses decreased 19.2% quarter on quarter to INR 3.4 billion, primarily due to the absence of IPL-related expenses. Net of IPL spends, our other expenses were higher by 9.8% quarter on quarter, primarily on account of 12.2% higher client acquisitions. Our reported EBITDA margin at 34.5% is higher by 1,270 basis points over Q1 FY26. However, on a normalized basis, adjusting for the IPL spends, our EBITDA is higher by 6.1% quarter on quarter to INR 3.2 billion. Our reported profit after tax grew by 85% quarter on quarter to INR 2.1 billion.
However, our normalized profit after tax grew by 10.1% quarter on quarter. On the balance sheet side, our period-ending client funding book stood at INR 59.5 billion, supported by incremental borrowings, which increased by INR 10.3 billion from March 2025 to aggregate to INR 44.2 billion. Our net worth increased to INR 58.3 billion as of September 30, 2025. Cash and cash equivalents remained healthy, driven by higher client balances, partly offset by deployment into the funding book. With this, I conclude the presentation and open the floor for further discussion. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Prayesh Jain with Motilal Oswal. Please go ahead.
Yeah, hi. Good morning. Congrats on a good set of numbers. Sir, first question is on the cash segment where we saw the realizations dip, and also I assume that you have taken a pricing action on the cash side. So how do we see this panning out from? And that would be the first question. Second would be on the breakup of distribution income where if you could split that up into credit, wealth management, and others in some form, that will help us understand the color of the revenues. Third question is on the margin trade funding book. Do we have a separate realization for margin trade orders placed to margin trade funding book, or it is the same as the order that you charge on the cash delivery? Yeah. And lastly, on the burn of the new businesses, what is the burn on the new businesses? Yeah.
Yeah, Prayesh, thank you so much for the questions. On the sort of on the cash segment realization, again, it changes on what the mix of various things is there. But on the pricing action, I just want to clarify because you asked that question. I think the pricing change really is to bring things, make things simpler. What we have done is that across both delivery as well as intraday, we have made it 0.1% with max of INR 20 and min of INR 5. What it will do is that it actually makes just the whole pricing very simple for the consumer. So that's on your first question. On the second one, on breaking out the distribution income, today, the way we don't break out that income, the way you should look at those businesses is look at AUMs as well as disbursals.
That's the best way to follow those businesses. They will build over a period of time, and they all have different gestation periods. So today, we don't break them out. On the MTF book realization, Vineet, do you want to take that question?
Yeah. So right now, we are charging the same price broking commission that we charge for cash delivery where there is no MTF that people avail. It's the same.
Okay. On the burn, I don't think we are breaking out our burn of different entities.
Yeah. So as I've been telling in the past that the burn remains in that range of about INR 100 crores annual for the two new businesses that we are incubating, the asset management and the wealth management business.
That rate continues, right?
Yes, yes.
Okay. Thanks.
Thank you. Our next question comes from the line of Swarnabha Mukherjee with B&K Securities. Please go ahead. Mr. Mukherjee, your line has been unmuted. Please go ahead with your question. Swarnabha Mukherjee, your line has been unmuted. Please go ahead with your question. As there's no response, we'll move on to the next question. It's from the line of Nitesh with Investec. Please go ahead.
Thanks for the opportunity. So first question is on operating profit margin guidance that we have initially talked about of around 40% + as we reach for Q4. So do we retrade that guidance, or do we see some changes to that guidance as we end this year? That is first question. Second question is on wealth management business. So as of now, it seems like wealth management is completely built separately from the existing Angel One clients. Is there any overlap with existing Angel One clients, and what is the path to offer wealth management products to the clients which Angel One has acquired over a period of time? And third question is on a comparison with your peer. One of your peers has filed for an IPO. Their cost, their revenue structure, and their client base is higher than Angel, but their cost ratios are far, far lower.
So if you have compared, where do you see what are the reasons you see that the cost structure for that particular peer is far lower than Angel? These are the three questions, sir.
Thanks so much for your questions. On the OPM guidance, yes, we continue to have the same guidance at exit. We want to be at 40%-45% OPM, and we are well on our way to that path from everything that we can see. I'll come back to the wealth question. On the peer question that you asked, I think different companies are built very differently, and we take a very long-term approach to it. We are built in a different way. And so it won't be appropriate to compare different metrics. I think it's best to look at our metrics, our growth, and where we are going. We are continuously working on efficiencies and making sure that we get the most out of what we have, but very different kind of businesses, so best to look at them differently.
On wealth management, perhaps Srikanth, you can come in and talk about it.
Yeah. So no, Nitesh, I think that's a valid observation you make. So while at one point in time, the journeys are created for set of investors who have their own sort of unique identity of being a large value investor, but the current ecosystem of Angel One also, we are actually going to offer wealth solutions through both fractionalized products and also through platform services that we provide. So there is a lot of work happening in terms of harmonizing the float between the customers flowing in and the solutions flowing back from the wealth. So you will, over the course of the next few months, see that harmony sort of playing out between the customer cohort of Angel and the solution cohort of Ionic Wealth.
Sure. Thank you. That's it on my side.
Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one. The next question comes from the line of Sanketh Godha with Avendus Spark. Please go ahead.
Yes. Thank you for the opportunity. Vineet, I have a question for you. So basically, our margin trade funding book on sequential basis has grown by 24%. But if I look at our main number, interest income, it has grown just 5% QOQ. Just wanted to understand this divergence. Is it largely because we have cut the interest rates on the MTF book with the rate cut environment, or is it due to lower interest income earned on the float or margin money? And if you can do the breakup, it will be useful to understand this divergence between the MTF book growth and the interest income growth. That's my first question. If you answer this, I will move to the next. Yeah.
Yeah. Thank you for this question, Sanketh. So you're right. While the MTF book has grown by almost 26%, there has been a growth of just about 6.5% for the interest income. And that's primarily because almost 45% of the total income that we earn comprises of the interest that we earn from fixed deposits, and the balance comes from the MTF. And on that part, on that 45%, because the interest rates have declined, so the yields have declined by almost 50 basis points, and therefore we are seeing a lower income there. And of course, there was some moderation in the quarter in client margins, which have come back to normal levels now. So there was a little bit of decline in that. So that has been the reason why it has got affected.
There hasn't been any change in the interest rate that we charge from the clients on MTF. So it remains the same at 14.99%.
Perfect. Perfect. Got it. And see, the client margin coming down is predominantly of the lower trading activity. Is it fair to say that's largely the reason?
It could be due to multiple reasons, but as I said, that was a momentary thing, and things have come back. As we speak, we are seeing healthy client margins with us. It's not a matter of concern.
Okay. Okay. Got it. So the second question which I had was that, see, the number of orders per day in 1Q was around 5.6 million orders. And even in 2Q, it is at the same level, exactly the same level. Honestly, we were offered a view that if we see an improving trend to the question which you answered previously, that we might, by end of the quarter, go to 6.8 million-6.9 million orders per day by fourth quarter, and that will lead to that margin or operating margins to go back to 40%-45% levels. So just wanted to understand this 5.6 million orders per day, how confident you are will go to that kind of a number around 6.8-6.9 to deliver the 40%-45%.
If it is going to achieve, just any color you have, what will lead to this number to go up if you are not changing any prices, as you mentioned last time in the quarter?
Yeah. Hi, Sanketh. I think the way to look at this is, again, like I have said this, Vineet has also said there's been a ton of macro headwinds. And in spite of that, so we publish our orders per day number every month. So if you look at February, we were at, let's say, approximately INR 49 lakh to INR 50 lakh orders a day, right? So 5 million orders a day. Now, if you look at that in September, that has gone to INR 58 lakhs, 5.8 million orders a day. So that has been a very so month to month, there will be some variation. There are sometimes you see some market changes, and you can see some variations because of that. But that has been a very healthy growth when you see in the last six months or so.
So we think that is a good base and good base of growth. And we think it will continue to get the kind of revenue growth we are thinking in terms of creating that kind of OPM. And we are also being very, very conscious on our costs. As you can see, I think we are being very clear on being efficient there. So combination of both of those things should result in an exit OPM for sure.
Got it. Got it. And lastly, given SEBI Chairman or SEBI has been pretty vocal about elongating the tenure of the expiry contracts, suppose it comes, I don't know when it will come, given they are pretty vocal in communicating this point in public forums. So have you done any sensitivity analysis at your end to see a likely impact on the profitability if, say, eight number of expiries in a month get reduced to either two or one if they directly move to monthly thing? So any sensitivity you guys have done and likely impact on the numbers, if you could share, that would be useful.
Yeah. Hi, Sanketh. I think there's a lot of speculation in this area. So it's best for us to not add to that and talk about it because we don't know what is going to happen or if there is anything that is going to happen. So best to stay away from that. Let's just look at if there's something coming, and then we can talk about it.
Okay. Perfect. That answers my question. Thank you.
Thank you.
The next question comes from the line of Mohit Surana with HDFC AMC. Please go ahead.
Just one question from my side. If you can break up the MTF book between customers that have been acquired from the direct channel and the AP channel. That's it from me.
Mohit, we don't give out that number. And honestly, it doesn't matter because for us, both the clients give us similar interests. So it doesn't really matter. And anyways, we don't give out that number.
Sir, the commission that is paid out to the partners in the AP channel between broking and non-broking products, is there a way to think about it, how that is split up between broking and non-broking?
No, it's primarily for the broking commission that we share the fees with the partners. We do some sharing for the mutual fund for the regular plan, but it's primarily on the broking commission.
If at all there is an MTF book sitting with the customers that have been acquired through the AP channel, there is no sharing on the MTF part, right? Is that correct?
As I said, we share commission for the broking revenues that we earn from the clients that are tagged with the AP channel.
Understood. Very clear. Thanks a lot for your responses. Bye.
Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question comes from the line of Shobhit Sharma with HDFC Securities. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. So I have two questions. Firstly is on the customer acquisition cost. Can you give us some trends around how the customer acquisition cost has been trending, and how do you expect that to play around in the second half of the year? And we have seen over the last 12 months, we have slowed down considerably in terms of the new client acquisition. So what's going to be our strategy on that side? And lastly, can you help us understand what's your idea behind entering into the life insurance business, given that's a little bit complex in nature? So yeah, that would be two of my questions. Yeah.
So on CAC, it's mostly flat to slightly down, perhaps, but these things, just think of it as really flat. We have actually, I mean, just to point out, we did do more client acquisition. Last quarter, we had done 1.55 million, and this quarter, we did 1.74 million. So we grew about 12% in terms of client acquisition. So that growth has happened. For life, I can give it to Ambarish.
Yeah. Hi. Thank you, Shobhit, for the question. And the way we look at this particular opportunity is slightly different than how it has been so far on the legacy life insurance piece. We have actually been waiting for a while to see if there is a way to give out a product on the life side, which can be end-to-end digitally enabled. And so for a while, we have been, while being a distributor on the life side, we have not been able to really enable a complete end-to-end digital journey. While that is quite well played out in some parts of general insurance like motor, for instance, but that doesn't get played out in the life in a big way.
It's only recently that we came across an opportunity to do so with a set of people who have been successful in rolling out critical illness and protection plans purely on the back of digital enablement and also using proprietary technologies like face scan and so on. There are certain other technologies that this particular organization is also holding a patent for. So we realized that this was one reason that for a very long time, we could not achieve decent penetration in life. And what we have also observed that whenever a digital platform like ours has been able to solve for access, businesses have grown, retail consumers have begun to consume products which otherwise were not available to them. We saw that play out in the wealth. We see that played out in the credit too.
We are very confident that similar trajectory will get played out even in protection. Therefore, we thought perhaps the timing is right. Customer orientation is better. They have begun to understand the need for protection, especially post-COVID, and regulatory enablement, which is in some form enabling us to give this confidence that with insurance now for everyone by 2047, with IRDA's bill pending approval from the Parliament, which has some very interesting suggestions, including bundling of life insurance products with wealth, with savings. We believe that we have the right to play in a segment like that when products are getting digital and also an enablement to bundle them. Hence, we have decided to start our journey. These are long-term businesses. This will take more than a decade for us to turn profitable.
But we know that these businesses often take time while they will take time. But in a digital ecosystem, we are far more confident of how this will play out. I hope that this is your question, Shobhit.
Yeah. Yeah. Thanks, Ambarish. Ambarish, just a follow-up. So should we expect similar kind of acquisition run rate for the clients going forward for the next 12-18 months?
Look, I don't want to give a forward-looking statement on that, but you can look through sort of the last few quarters, and that should help you extrapolate. We look at a variety of factors when we go into what we want to acquire because it has to be the right set of customers, people who want to make investments. So I'd just say looking at the past few quarters should give you a sense of it.
Okay. Thank you, Ambarish.
Thank you. The next question comes from the line of Neeraj Toshniwal with UBS Securities. Please go ahead.
Hi. My question is again on the price increase that you have taken, and if you can give more quantitative sense on how much increase in revenue that can have because we don't know how many customers were at the minimum earlier on the earlier economics. And also on the cash realization, I think Q1 was a bit of an uptick, but again, Q2, we saw again a kind of a moderation. So what kind of dynamics seem because cash coming in anyway is down throughout the year. And how can we think of it playing out in the future if we can give some color to that?
I could understand your first question was about pricing. The second one, can you please repeat? Was it about CAC?
It was on cash realization, which went down in this quarter compared to an uptick that we saw in Q1.
Got it. Got it. Okay. I got it, so let me take your price question. I think I just, for earlier question, talked about what is the sort of exact price change, and just to reiterate, the price change is to make things simpler for the customers. It becomes sort of the same pricing for intraday and delivery. Since you asked for the quantitative thought on that, we expect that on a yearly basis, at current run rate, it should have about INR 50 crore-INR 60 crore upside on a net basis to us, so it actually just falls down to the PBT in that sense, and on cash realization, I think Vineet talked a bit about it. I don't have anything more to add, but Vineet, do you want to talk about that?
Yeah. I think that based on the market factors and other things, keep on varying. So not really anything that we can give any further details on.
Got it. That is very helpful. Thank you so much.
Thank you. The next question is from the line of Abhijit with Kotak Securities. Please go ahead.
Hey. Hi. Good morning, everyone. My first question was that typically of all the customers you acquire in a quarter, how many would come from the AP network versus direct?
So the AP, the clients acquired through the AP channel contribute about 24%-25% of the total acquisitions that we do in any quarter. And this number could vary between 20%-25% depending on the quarter. So yeah, that's the kind of proportion.
Got it. Second question was that if I look at the distribution revenues that you've called out, now, obviously, there is wealth within that. But if I strip that out of the rest of the business, is it possible to get some sense how much is coming from the AP network versus direct?
Yeah. No, we don't break that out. I think on distribution, the best way to follow it is using the numbers we are giving on AUM and distribution. As those businesses mature, we can perhaps break them out in the future. But they're growing. I mean, you can look at the numbers, and they're growing really well. If you look at credit distribution or AMC or wealth, all of those numbers have been growing really well.
Got it. So the question was that when I look at the broking business as such, just trying to figure out if there are ways to improve margin profile of this business, especially given the earlier comments around automation and some of the other points you mentioned at the start of the call. Are there any levers, low-hanging fruits, or any plans to kind of cut down on some of the cost and make it a more profitable business?
Look, we are continuously looking at efficiencies. The idea is that where we are going in terms of OPM, right? I mean, we want to, like we said, we're looking to exit at 40%-45% OPM. That's where we are going in terms of that. In terms of cost, efficiencies, and overall efficiencies, don't just think of cost, but overall efficiencies, that is definitely happening. For example, if you look at the chatbot that I talked about, if we didn't have that, we would have had to take on the cost same way with email responses. There's a lot happening inside the company on AI that will improve efficiencies. We are looking at efficiencies all the time and saying, "Look, how do we make ourselves better every day?" That is a constant, continuous journey that we are on.
But there are definitely things that we look at and make sure that we get the most out of what we have.
I just want to recheck the number you mentioned in terms of impact of price hike. It was INR 50 crores-INR 60 crores, right? 50 to 60.
That's right. INR 50 crores-INR 60 crores on a net basis.
All right. Got it. Thanks a lot.
The next question comes from the line of Bhuvnesh Garg with Magma Ventures. Please go ahead.
Yeah. Thank you for the opportunity, sir. A couple of questions from my side. Firstly, on the customer acquisition. So just want to understand that what has led to the increase in this customer acquisition cost because it has been elevated for the last two, three quarters. And how do you see it going forward? Because it has disrupted the economics of our business for now. And whether it is a new normal or if it is expected to go down, what will drive it down going forward? That's the first question.
Arif, want to take the customer acquisition cost question?
Yeah. Hi. Arif here. Am I audible?
Yes, sir.
Yes, you are.
Yeah. So the way we look at it is cost of acquisition is an investment that we do in terms of acquiring the right customer. And if we feel that the customer is right and we feel that the return on that investment makes sense economically, we think that's the right thing to do. We are quite confident that the quality of clients that we are acquiring for the spend we are doing makes sense economically. We will be aggressive on this wherever we find the opportunity. Yeah.
Right. Right. But if the customer acquisition cost doesn't come down, then how will we achieve our 40% EBITDA margin target that we have guided for? Because for the last two, three quarters, it has been hovering around the same level of 34%-35%.
So, two, three things, right? One, obviously, we'd want the revenues to go up, and we'd want the revenue market share to go up and all of that. But cost-wise, also, we are looking at how do we push our organic? How do we push our content-based acquisition, some of those things? But again, as I said, we look at business in slightly long-term also that today, if we have to invest something into acquiring the right clientele, even if it is slight dilution in the OPM in short term, but if it gives us return in long-term, that's something that we are interested in.
Okay. Sure. Sure. Understood. And second.
To that, just to clarify this with me, look, one of the aspects is the customer acquisition cost, which I said, look, is stable to slightly down, perhaps. But there is also the revenue increase that is happening quarter over quarter. You are seeing that for a couple of quarters as well. So that will happen as well, and that should result in a 40%-45% OPM anyway.
Okay. Okay. Understood. Understood. And second thing is on our employee base. So overall, out of around 4,000 employees, I believe nearly 900 are in digital teams. Of the remaining, let's say, around 3,000. So if you can share some breakup of how much of it is in, let's say, customer services, I want to understand from the perspective of that in one of the earlier questions, one participant asked compared with the peer that they have around 1,500 employees for the similar scale of operations as we have, and we have 4,000. We just want to understand where is the difference. Do we have P2 and P3 for our business, assisted business, and how much would that be for the assisted business? So where is the difference in these employees?
Look, I mean, one is that we don't break these out. We give you sort of the total information. However, we are slightly different businesses, which is what I was saying, and long-term, we've shown sort of there is a strength to having that business, so we have both, as you know, an AP business as well as a direct business, and so there is no P2 and P3 that we have, but of course, in the AP business, we have APs, and we have folks, RMs, and stuff like that where they would be working with the APs, so slightly different structures, but over a period of time, we are definitely creating more and more efficiencies, so you'll see more output out of what we have, and what's also happened is that we are also a much more mature organization where we have built out all the functions already.
Therefore, you're not going to see more getting added to this, which is why you see sort of our employee benefit expense being the same last quarter and this quarter. Part of it is that we've sort of built out. We are more mature. We built out these functions. Part of it is just slightly different business. We'll continue to work towards making everything more efficient and get the most out of what we have.
Sure. Sure. Understood. And just a housekeeping question. So if you can share the numbers on revenue and AUM under mutual funds and also our market share in SIP flows. We give the data on a number of SIPs, but what would be our market share in SIP flows? Yeah. These two data.
Yeah. Hi. We don't share those breakups at this time. So we can't give you that data. We do share, I think, the number of SIPs, and we share the total AUM for AMC, but we don't break out these numbers, or we don't have the market share there.
Okay. Fine. Thank you, sir. That's it from my side. And all the best. Thank you.
Thank you. The next question comes from the line of Raman KV with Sequent Investments. Please go ahead.
Hello. Can you hear me?
Yes, sir. Please go ahead.
Sir, I joined the call a little late, so apologies if my questions are repetitive. I just want to understand this life insurance JV, which you planned, subject to the SEBI approval. I just want to understand, are you planning to become a distribution launcher? Is this a distribution type of business, or will you be launching your own products?
Yeah. Hi. Hi, Raman. Thanks for the question. So look, this is a 26% joint venture partnership from our end. And so while the actual manufacturing will come from the 74% partner, and all we are doing is helping to see if there is a way to co-create some of these products with the insurance company, given our better understanding about the customer segment that we service on our platform. So while the manufacturing largely will be managed by the 74% partner, in this case, LiveWell Holding Company (Pte.) Limited, Singapore. And they have all the requisite expertise to do so. We would also be offering our platform exclusively for distributing the product that we are going to co-create with the manufacturer. So to that extent, they will be exclusive to us on our platform. But that's all so far as this particular joint venture is concerned.
So basically, the other JV partner, they will be coming up with the insurance products, and you will leverage your Angel One's platform to cross-sell that product, if my understanding is right.
Yeah. That's right. So the JV company actually will have its own distribution network. Largely, it will be relying on digital networks for distribution. We will be one of those digital partners who will be distributing those products on our platform. However, by virtue of us being a joint venture partner, there is an opportunity to co-create products which are specific to our platform.
Okay. I just want to understand. Initially, you mentioned 46% of the gross revenue came from broking segment in this quarter. Can you give the other split? I wasn't able to note the other gross revenue split.
Hello?
Hello?
Hello? Yeah.
Can you hear me?
Yes. So the F&O segment contributed 46% to our gross revenues, while cash segment contributed 8% and commodities about 6%. Interest income from client funding and deposits brought in about 32%, and the balance came from depository distribution businesses.
Okay. Thank you, sir.
Thank you. Participants who wish to ask a question may press star and one. The next question comes from the line of Prayesh Jain with Motilal Oswal. Please go ahead.
Yeah. Hi. Thanks for the follow-up. Your guidance on a 40%-45% exit rate by fourth quarter, right? And if I assume that the cost remains the same and assume that exit rate will be 45% EBITDA margin, you're talking about almost a 20% kind of a jump in revenue rate from the current quarter to the fourth quarter. So how do you think this would come through? How much would be from broking? How much would be from your new businesses? And obviously, in that period, how should the cost kind of pan out, right? So just trying to understand when you say 40%-45%, what are the thoughts behind it? Broking growth or these businesses capturing a larger share of the growth? How should we think about this?
Prayesh, as you've been seeing, we've been growing our order run rate every month, and we see that in H2, we will see a better order run rate, and therefore, broking will continue to be the mainstay of the growth. Obviously, the distribution businesses are also now contributing to the top line, so hopefully, with all these things coming in, the exit in quarter four, we should see a 40% + operating margin. Costs are more or less stable at where we are today, and therefore, I don't see a bump up in cost. Margin trading funding is also something which is growing significantly, and therefore, these things will help us improve the margin. Customer additions also are a growth engine for us, so as we keep on adding clients and those clients become active, they will start contributing to the orders and the revenues.
The 5,900 margin trade funding book that we have at the end of the quarter, how much does the balance sheet kind of provide you the room to go up to considering more borrowings or net worth? Because simultaneously, the ADTOs and the cash is going up. You will also require net worth to support the margins, right? So what is the kind of balance sheet flexibility you have to kind of scale this up to, say, about 10,000 crores or 12,000 crores in the next few quarters?
Yeah. So as we've been mentioning, we can easily double this book from where we are today without having to raise any additional capital. And as you would have seen, the gearing ratio for us is pretty low, debt equity ratio. So we don't have any challenge there. We can easily raise more funds on the debt side to be able to leverage and fund this book.
Got it, and last question. In terms of a customer acquisition, how much would be organic, and how much would be through the paid, and how has that been kind of trending in the past few quarters?
So we don't break it out, Prayesh, because even if we were to try to, it's not super straightforward, and it's not very reliable because it depends on how you attribute various things. There are all kinds of attribution mechanisms. So we generally stay away from it. You get to see sort of some of the costs that we are incurring, and that's probably the best guidance there.
Right. Okay. Thanks.
Mr. Prayesh, does that answer your question?
Yeah. Yeah. It does. Thanks.
Okay. Thank you. The next question is from the line of Sanjay Ladha with Bastion Research. Please go ahead.
Yeah. Hi, sir. Thank you for the opportunity. So I have two questions. The one is, so we are developing various products in-house, like mutual fund, credit, fixed income, wealth management. So can you share at what AUM or at what time frame we are looking to break even or start generating profit? I understand all our products are long-term products, but wanted to understand the scale and profitability from three-to-five-year time period horizon.
Yeah. So I think this is a question which we've been answering for a while now. The wealth business, we anticipate should turn break even incrementally, say, in about two and a half, three years' time, while the AMC business, which is a low-cost, long gestation period business, should be able to turn incrementally break even in about seven to eight years.
And, my another question would be, so what is the cross-sell ratio for us? As we are largely top three players in the broking business, but incrementally, and as we move forward, our cost to acquisition cost is keep on increasing. So I understand you guys are developing client acquisition base and improving the trend so far. But just wanted to understand what is the cross-sell ratio and how you guys are thinking on that line so that we try to understand as of going forward how things will change from here on in terms of cross-sell ratios and developing on that side.
Right now, we are able to actually leverage the platform quite well, right? People are coming in for broking. Most of the acquisition is for broking, and then people are going to mutual funds, lending, other places. So we are definitely seeing that advantage. And as these businesses grow, you're going to see more and more of this cross-pollination advantage that will come in. But we don't define the ratio except for I gave you one data point in my opening remarks where 50% of the mutual fund customers are also buying equities. So you can see there is sort of that cross-pollination already happening.
Thank you, sir. Thank you so much.
Thank you. The next question is from the line of Saeed Jaffery with Ajanta Capital. Please go ahead.
Yeah. Good morning, sir. I just had one question on the income breakup. Now, brokerage as of now contributes for about 60% of the gross number, as I see in your presentation. And we've been incubating a couple of these new businesses like AMC and the wealth management tools, now insurance as well and credit products. On a more longer-term basis, what would be according I mean, how do you see these businesses evolving, say, three years out, four years out? Where do you think this breakup will settle at? Or think about it in another way. What do you think will be a good diversified income mix for you? What would be that number?
Yeah. So on a longer-term basis, while our broking business itself is going to grow at almost 25%-30% long-term, so there will be a long growth story for this business. The newer businesses, especially the distribution, the wealth, and the asset management businesses, between three to five years, our estimate they should contribute double-digit to our top line, and while in the absolute numbers, they will be significant, so that's how we see the business evolving in terms of revenue diversity over the next three to five years.
Okay. And of the three new businesses that you have, which is the credit business, the AMC, and the wealth, which will probably have a higher scale of the three?
Wealth and distribution businesses should have a higher share in the revenue because AMC, being a passive business, is a low-yielding business. Therefore, the wealth and the distribution businesses will have a higher share in the diversification.
Okay. And currently, the products that you have on the AMC tool, what is the yield, sir?
The fees, the TER which we charge is in line with what is the market factor. On average, the TER which we are charging across products in our direct fund is approximately 25%-30%.
Got it. That's blended of the seven products that you have. Got it. That is it from my side. Thank you.
Thank you. The next question comes from the line of Diya with Sapphire Capital. Please go ahead.
Hello, sir. Am I audible?
Yes, sir. Yes, ma'am.
So your revenues decreased on a YoY basis. So what is the reason behind that? And do you see this trend continuing this year, or will it get better this year and for FY27?
Yeah. Hi. So, the basis for the revenue decline is primarily on two fronts. One, there was a lot of gross activity in the market this time around last year because of the general elections and the overall activity in the market. And two, there was a stream of income that the industry used to earn, which was arbitrage on the transaction fees, the turnover charges that the exchanges used to levy on the brokers, and the brokers used to levy on the client. That became zero from 1st of October last year. So that was one big decline that the entire industry saw and, of course, the market factors.
Diya, just to add to that, if you're following year over year, the other thing to follow is how the market share has been doing for us. Because if you look at, for example, our cash market share, it's gone from 17.5%-18.7%. The F&O premium market share has gone from 20.7%-21.7%. Same way, commodity has gone from 62.2%-65.1%. So there's been very large increases in market shares that we've shown year over year. So as a company, we continue to perform really well in this segment. And long-term, we believe in the value of the industry, the macro in India, all of that that DT talked about at the beginning. So the future in that sense is very good. This is like a one-year aberration that we are talking about.
Okay. And for the revenue targets for next year, what do you think it should be?
We don't give out any targets on revenue. The only guidance that we give is on operating margins. And we've said this year's exit will be 40%+ . Long-term, we should be able to achieve 45%-50% operating margins as we go along and grow the businesses.
Okay, sir. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today's confurence call. I now hand the conference over to Mr. Dinesh Thakkar for closing comments.
Thank you once again for joining us today. I hope we have been able to answer your questions and share useful insights. If you need any assistance, please reach out to Hitul Gutka, our head of investor relations, or to SGA, our investor relations advisors. Have a wonderful day.
Thank you. On behalf of Angel One, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.