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Angel One Ltd
NSE:ANGELONE

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Angel One Ltd
NSE:ANGELONE
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Earnings Call Analysis

Q2-2024 Analysis
Angel One Ltd

Record Revenues and Robust Growth in Q2 FY24

The company celebrated its best quarter ever, both operationally and financially, with gross revenues surpassing INR 10 billion for the first time in Q2 FY24, fueled by a 29.7% sequential growth in average daily orders. Broking revenue soared by 30.4% to nearly INR 7.3 billion, contributing to 69% of total revenues. The focus on older clients enhanced revenue stability, as interest income and ancillary transaction income rose substantially. Operating margin improved to 51.3%, and profit after tax jumped by 37.9% from the previous quarter, resulting in a dividend of INR 12.7 per share.

Record Performance Marked by Strong Profit and Revenue Growth

The company delivered a historic performance in the second quarter of FY '24, with its consolidated profit after tax from continuing operations surging by 37.9% quarter-on-quarter. This leap from INR 2.2 billion to over INR 3 billion underscores a robust operational and financial standing.

Robust Revenues and Client Activity Fuel Success

A milestone was achieved as gross revenues crossed INR 10 billion for the first time, indicating the company's strong foothold in the market. This success can be attributed to heightened market conditions and increased client activity, leading to a jump in average daily turnover and orders by 29.7%. Significantly, Futures & Options (F&O) remained the main revenue driver, responsible for 85% of the gross broking revenue.

Operational Efficiency Reflects in Margin Expansion

Operational expenditures aligned well with the expansion, moving in concert with higher client acquisition costs and technology infrastructure investments. Despite these expenses, consolidated operating margins improved from 48.6% to 51.3%, showcasing adept cost management and scalable business operations.

Customer Engagement and Experience at the Forefront

Customer satisfaction saw a significant uptick, reflected in improved Net Promoter Scores (NPS). Efforts to enhance user experience via the app have borne fruit, with customer acquisition gaining momentum. Investments in branding and marketing have also contributed to the company's growth, optimizing acquisition strategies through diverse channels.

Sustained Client Value Creation

Anticipating consistent client interest in the market, the company exhibits confidence in its asset performance. Data on client and order cohorts reveal promising client longevity and revenue retention, suggesting the company's initiatives are indeed solidifying customer relationships.

Strategic Diversification into Wealth Management

The company is extending its repertoire to encompass wealth management services. Initially targeting high-net-worth individuals, it aspires to democratize these services for clients with lower investment capacities, leveraging its technological prowess to deliver premium services at scale and at lower costs.

Customer Lifetime Value - A Long-Term Growth Perspective

Focusing on customer engagement and service consumption provides insights into the lifetime value of clients, which is projected to be substantially higher than current estimates. The company emphasizes that the lifetime value, especially considering younger clientele, far exceeds the cost of acquisition and holds immense potential for growth.

Earnings Call Transcript

Earnings Call Transcript
2024-Q2

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Operator

Ladies and gentlemen, good day and welcome tot he Angel One Limited Q2 FY '24 Conference Call. [Operator Instructions] Please note that this conference is being recorded.

This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

I now hand the conference over to Mr. Hitul Gutka from Angel One Limited. Thank you, and over to you, sir.

H
Hitul Gutka
executive

Good morning, and welcome, everyone. Thank you for joining us today to discuss Angel One's Q2 FY '24 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; Hitul Gutka, CFO. We also have the senior leadership team of Angel One, along with SGA, our IR consultants. The leadership team will give you a brief overview of the operational and financial performance of the quarter gone by, followed by a Q&A session.

Please note, there may be certain forward-looking statements during 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.

D
Dinesh Thakkar
executive

Thank you, Hitul. Good morning, everyone. I'm happy to share that quarter 2 FY '24 reflects the superior acquisition of Angel One's robust growth strategies as we continue to gain market share across various parameters.

I will take you through some of the company's key development and leave you with a summary of our plans for the next few quarters, after which Vineet will walk you through our financial performance. .

Seamless and superior client experience on our digital platform is the bedrock of company's growth. To maintain this growth in digital era, we must always prioritize our clients' needs and keep current with the rapid pace of technological and product development.

During the quarter, we rolled out enhancements across the Super App, which led to further improvement in our overall NPS. I'm happy to share that we continue to innovate and offer our clients some of the industry's leading features across all offerings on our platform. We have focused especially on simplifying the on-boarding process for both new to market and experienced clients, thus giving them a superior experience of our tech capabilities right from the first point of contact with our Super App.

The success of this approach is evident from our improved ranking among the top 10 plus of 3 finance apps on Play Store and our third place banking on IFL.

Since majority of our clients are digital native hailing from Tier 2 cities and beyond, who are new to market, it is imperative we create journeys that are user-friendly, compelling and easy to follow as we handle them through their initial experience of our products.

For example, through trade body within the Super App, we present a platform from which these new investors can embark on their first trading journey. This feature compiled by influencers within diverse customer cohort offers a repository of curated educational videos in regional languages, which leads to better acceptance and motivation to consume such content.

Moreover, to encourage and help young people to invest systematically and build their lifetime well, we have deployed and released the stock SIP feature. Over the course of the year, we will roll out several more exciting features such as market open interest analytics, global indices and stock discovery. This will further simplify our clients' investing and trading journey.

Our endeavor to develop a lifelong relationship with our clients through a comprehensive digital financial services playbook has reaped handsome dividends, evident in the steady uptick of unique SIP registered through our app. With over 25,000 unique SIP registered in quarter 2 FY '24, we continue to remain India's second largest player in terms of incremental registered SIPs.

Furthermore, we are systematically broadening our financial services offering with plans to close the financial life cycle look of our clients by distributing consumer credit products on our digital platforms in the upcoming quarters. We are currently building the platform and integrating our lending partners.

We are also developing driven intelligence across customers' credit profile to help vendor's underwriting process. With such a large client pool, we have access to a large quantum of data. We are harnessing the power of data by building predictive models driven by deep learning of our clients' behavioral pattern to further elevate the client experience on our platform. These models are integrated in our system using AI/ML techniques to craft hyper-personalized journey, ultimately enhancing time satisfaction and delight.

We have developed significant pivotal strategies to augment our decision-making process based on this advanced insights and forecast, which has enabled us to adapt quickly to changing market conditions. We are investing in AI-led personalization to enhance user discovery on our Super App.

We are also working towards incorporating the recommendation of data protection to the extent notified to ensure greater security and consent [indiscernible] for our clients. As mentioned in our quarter 1 FY '24 earnings call, we rolled out our brand campaign to enhance awareness of our full stack fintech platform to address all our clients' financial needs and aspirations. The reception of this platform has been a resounding success, as we have noted through our brand track exercise.

During the quarter, we on-boarded Nishan Zain as our Chief Business Officer for our assisted business. He was pivotal in scaling up the online ordering business of Zomato and growing the merchant network of [indiscernible]. Nishant has also held senior leadership position at Coca-Cola and Pepsi Co. Nishan's experience in building large-scale franchisee will help formulate alliance with essential stakeholders and enhance business performance through our strategic growth of our assisted business.

Here, we plan to divest and become a multichannel business as we build an ecosystem that offers a full suite of financial products on our platform. We will leverage the new data set and our digital capabilities to empower our partners to serve a wider client base. We plan to further augment our NXG platform as we integrate more features based on data. thus enabling our partners to have a more integrated approach to growth.

Through this medium, we'll be able to connect and positively influence our large undersold segment of country's population. I'm also happy to introduce Ravish Sina, who has taken over the rims as CPTO. Ravish has a remarkable track record spanning over 2 decades. He held senior leadership positions in cutting-edge technology companies such as Flipkart and Yahoo. Ravish will drive the delivery of Angel's product vision, strategy, design, engineering and cross-functional influence.

During the quarter, the Board approved our business restructuring plan, which includes the purposed move of our broking business under our direct and assisted channel to our wholly owned subsidiary, Angel Fresh Limited and Angel Securities Limited, respectively. By doing this, Angel One Group will have a more focused and efficient organizational structure, and each business will have better flexibility and independence to foster growth and become a leader under their respective segments.

As Angel One will be a flagship company, it will continue to house the Supera tech infrastructure and development, product development, data analytics and other business support functions. Since all the companies are wholly owned subsidiaries, there will be no negative impacts on financial performance of the company.

In quarter 2 FY '24, we moved ahead with filing off -- sign and approval of our AMC business. We are progressing rapidly in setting up the business infrastructure and building the team and are continuously engaged with regulators on these regards. It gives me a good pleasure to share with you that our organizational culture is being well recognized.

We have now been listed amongst the top 100 best companies to work for in India, both for women and millennials, a recognition given to us by the Great Place to Work Institute. This fortifies our commitment to develop a safe and secure workplace for everyone.

I'm delighted to share with you that our operational performance in quarter 2 FY '24 has been historic. We have over 2 million customers in quarter 2 FY '24, which is our lifetime best, thus growing our client base to over 17 million as of September 2023. This growth has advanced our share of India's incremental and total demat accounts to 22% and 13.2%, respectively.

Our orders, a key revenue driver of our business, grew by robust 36% sequentially to over INR 338 million, again, marking our lifetime best. The ADT generated on our platform continued to be in an up trend, growing by 30% quarter-on-quarter to nearly INR 30 trillion as we continue to gain market share in overall retail equity turnover by 168 bps quarter-on-quarter to 26.2 percentage.

In H1 FY '24, we acquired over 3.4 million clients and reported nearly 587 million orders executed on our platform, which is 73% and 63%, respectively, of FY '22 performance. I hope these insights have given you a flavor of our tech-driven business model and our growth strategy to become a more integrated financial service plan. Vineet will now take you through our financial performance. After which, we will be happy to answer your questions. Vineet, over to you.

V
Vineet Agrawal
executive

Thank you, Dinesh, and good morning, everyone. As highlighted by Danish, quarter 2 of FY '24 has been a very strong quarter for us as we present our historic best performance across both operational and financial parameters.

Our quarterly total gross revenues exceeded the INR 10 billion mark for the first time during quarter 2 of financial year '24. This was driven by robust market conditions, coupled with amplified client activity, as seen from our historic best average daily turnover, average daily orders, which grew by 29.7% sequentially to INR 5.4 million, taking our aggregate orders to INR 338 million in quarter 2 FY '24.

Notwithstanding that there were 3 that is 5% more trading days in quarter 2 of FY '24 when compared to FY '21 -- quarter 1 on FY '24, our gross broking revenue grew by 30.4% quarter-on-quarter to nearly INR 7.3 billion, accounting for about 69% of our total gross revenues for quarter 2 of FY '24.

F&O continues to drive our gross broking revenue, contributing 85% in quarter 2 of FY '24, while the share of cash in commodity segments remained stable at 11% and 4%, respectively. Since majority of our clients are under the direct channel, their share in our net broking revenues stood at approximately 78% and the balance 22% was contributed by clients acquired through our assisted business. As clients continue to transact on our platform, their contribution to revenues remain robust.

Share of more than 2-year-old clients steadily increased to 46% in quarter 2 from 25% in quarter 2 of FY '22. The longevity of these young new to the market, revenue-generating clients on the platform is further being fortified through our various initiatives, developments and offerings across the entire spectrum of Angel One's Super App platform.

It is noteworthy that we continue to witness healthy revenue progression as clients become more attuned to our platform. I would like to emphasize that our core level data remains exceptional. Data regarding broking revenue from clients entering this second, third and fourth years shows strong performance at 85%, 80% and 63%, respectively, of their first year revenue.

When we apply this updated behavioral data to our client set acquired in FY '22, the 3-year estimated revenue to cost of acquisition continues to remain very robust at 7.9x. This reinforces the strong unit economics underlying our business. Interest income, which includes interest earned from our client funding book and from deposits with exchanges grew by approximately 25% quarter-on-quarter to INR 1.8 billion.

This accounted for 17% of total gross revenues in quarter 2 of FY '24. The ancillary transaction income linked to the turnover, clients on our platform stood at approximately 0.9 billion accounting for nearly 9% of quarter 2 FY '24 total gross revenues. Finance cost was higher by 44% quarter-on-quarter to INR 264 million in quarter 2 of FY '24 on account of higher average borrowings for the period in line with higher client funding booked.

Quarter 2 of FY '24, finance cost also includes the impact of higher borrowings for substituting the underlying collateral for bank guarantees with own funds towards margins with clearing corporation pursuant to the semi circular discontinuing any client funds as collaterals for bank guarantees.

Employee benefit expenses, including ESOP cost at INR 1.3 billion in quarter 2 of FY '24, was higher sequentially due to increase in our head count and related hiring spends. Other OpEx for the quarter of over INR 2.6 billion grew in line with our operations, driven by spends on higher client acquisition, their onetime on-boarding costs, operating expenses towards tech infrastructure demat charges, CSR and other expenses.

Our consolidated operating margin for the quarter stood at 51.3% versus 48.6% in quarter 1 of FY '24. 26% increase in depreciation and amortization costs to INR 112 million in quarter 2 of FY '24 was on account of the commissioning of our disaster recovery site at China.

Our consolidated profit after tax from continuing operations grew 37.9% quarter-on-quarter from INR 2.2 billion in quarter 1 to over INR 3 billion in quarter 2 of FY '24. For quarter 2 FY '24, the Board has approved a distribution of 35% of post-tax profits as second interim dividend to the shareholders, aggregating to INR 1.06 billion, translating to INR 12.7 per equity share.

Our H1 FY '24 total gross revenues and profit after tax stood at INR 18.6 billion and INR 5.3 billion, respectively, representing a growth of 30.1% and 32.9% over the corresponding period last year. Period-end cash and cash equivalent increased to INR 76 billion on the back of increase in client margins. Period end client funding book grew to nearly INR 19.5 billion, compared to INR 11.5 billion as of March 2023.

Consolidated net worth of the company grew to INR 26.1 billion. As we continue to operate the business within our desired margin profile, our H1 FY '24 annualized return on average equity remains healthy at 44%.

With this, I conclude the presentation and open the floor for further discussion. Thank you.

Operator

We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Swarnabha Mukherjee from B&K Securities.

S
Swarnabha Mukherjee
analyst

So first of all, I'd like to congratulate all of you for the strong performance that you have reported. Now coming to questions. First question is on the assisted part of the business. So in Slide 6, you have given some color on how -- what is the plan, but I request you to give it a little bit more granular and qualitative manage so that we can understand what this part of the journey of the business is expected from this part.

And given that you have mentioned the involvement of leading DSAs and from distributors, so are we eventually going to model this part of business into a national distributor kind of a model? And will retail be our core focus areas? Or are we going to kind of move up the scale and target SNM as well? So that is the first question.

Secondly, sir, I also wanted to understand a couple of things on the tin business performance. First of all, the strong increase in the number of orders that we are recording per day. So what would be the reasons, if you could break it down? So apart from the fact that the overall market remains by and how is the acquisition of new customers going on over something in this or BAC also ramping up in volume? And single levels, if you could point out in a little bit more detail on that. And thirdly, related to the customer acquisition. I wanted to understand the strong growth we are seeing, how would be the contribution of the channel related to that and the directives that have come up where we are standing on that. So these are my questions. .

D
Dinesh Thakkar
executive

So Mr. Mukherjee, I understand your first question was on assisted channels. So I will ask Nishan to answer that part.

U
Unknown Executive

Yes. Thanks for your question. Let me kind of paint a picture, which may help you kind of decipher what one is intending to do.

Today, if you look at our existing scenario, we are primarily centered around a single channel acquisition, which is sub brokers and primarily in the equity SNO play. Now if one was to zoom out. What you would see is that there are limitless possibilities and A lot of opportunity for partnerships, which exists if one was to kind of look at perhaps with fintech, various tech players, banks.

Even if you look at certain other channels, for example, the mutual fund distributors or the POSTs or the DSAs. If one was able to kind of provide a good product market fit and kind of cater to the niche that they exist in, perhaps there are a lot of synergies that could be built out. So the idea of assisted business is, therefore, to have a multichannel, multiproduct play and be able to eventually build a funnel through which we cross-sell our under products at a certain point in time with the end objective being creating a Angel One equivalent size in the next 3 to 5 years within assisted business.

D
Dinesh Thakkar
executive

Okay. [indiscernible], can you repeat that?

S
Swarnabha Mukherjee
analyst

On the assisted business, was that once we embark on the plan and thank you, Vishant, for giving this color. So once we embark on this plan, will it kind of center around our existing customer in we tap into right now, say, younger customers and I think an increasing mix towards Tier 2, Tier 3 customers. Or shall we also kind of gravitate towards maybe more higher ticket customers and be more -- like more a wealth outfit in the making. So that was, I think, my second part of the question on the assisted sales.

D
Dinesh Thakkar
executive

Yes. So the target audience that we'll be targeting would be much beyond broking. As Nishant said, that we would be looking at like distribution channels where we can sell also other products like insurance, mutual fund lending product. And even that will include lots of in like wealth management dynamic product. So overall, the kind of end market we are looking at is much beyond that what we were cutting to previously.

U
Unknown Executive

And just to add to what Dinesh mentioned. See, we are looking at various customer cohorts. So the idea is not to cater to -- not to have a singular strategy for the entire spectrum. The idea is to create customer personas, create customer cohorts and be able to serve them based on what they require. And therefore, to your question, answer would be that, yes, we will be serving different other segments as well over and beyond what we currently do. And that's the whole idea of creating a wider play.

Operator

The next question is from the line of Prayesh Jain from Motilal Oswal.

P
Prayesh Jain
analyst

And congrats on great set of numbers. Sir, firstly, on the interest cost. You mentioned that there has -- there is some impact of the upstreaming element, then the margin trade funding book was also higher. But if I look at the interest cost, that's just gone up by INR 8 crores. And you had mentioned earlier that around INR 40 crore impact would be there for 9 months just because of streaming. So that itself would entail around the INR 12 crores, INR 13 crores of incremental cost for the quarter. That is my first question.

Could you triangulate that for me as what -- how should we look at this interest cost for this quarter and going ahead? Second is we've seen a very sharp ramp-up in customer acquisition in this quarter. So what really has changed? And what kind of momentum or things should we look at going ahead? And I think the previous question was also about one of the elements which was unanswered was with regards to the volumes that came in as a per day, per customer volumes have also been rising. So what is the kind of trajectory that we are looking at?

And lastly, you set up a new subsidiary for Wealth Management. What is that exactly? And whether the distribution is going to be sitting in this company. How are you going to or distribute the business of APs or online distribution business? Will it be housed under this subsidiary? Or how it's going to pan out? Could we leave that out for us? Those are my 3 questions.

D
Dinesh Thakkar
executive

So I will answer the rest of the question. Interest cost will take that later. On sharp ramp-up of retail acquisition customers and all that, that is attributed to our shifting from like old app to a new Super App, which has a better journey and it has like lots of like areas where customers are able to really like and when they look at the protein services, they're finding it easy to use our app and we engage with our app.

So our -- based on that improvisation in journeys and all that, we have seen a huge ramp-up in NPS and all that, which mainly shows that people are liking our app. And there is always a referral word of mouth in our market because this market is nowadays because of social media and all that, it's easy to understand that this app is better and people care for each other. So that is one of the reason.

And second reason would be that last quarter, as you said, that we'll be spending on our branding exercise so that people know what kind of like this shift we have done from single concentrating app to this latest [indiscernible] like app. So that has also helped us. And plus, we had spent more this time on acquiring customers, keeping in mind unit-wise economy. But we were able to optimize our marketing, our acquisition to different channels. That's the reason I would say this combination of all the factors that we saw ramp up our customer acquisition.

In terms of volumes, again, credit will go to kind of like journeys that we have built, we're are able to and get customers, we're able to monitor the customer journey. And we were able to build a good data science team, who is helping us in terms of, give us some content like information about customers, their profile, what they would like and how they'll get engaged more. If you look at when we introduce this SIP journey, that has helped us to our customers not only to buy one more product, but this customer is engaged for one more product. That gives us more conference time with customer and our app.

And as your question on this wealth management. Wealth Management, the total solution is not a distribution business. We would be creating lots of content solutions for [indiscernible]. And we would like to go into a ticket size, which has been challenging in the market how to serve a ticket size of INR 60 lakh, INR 1 crores and around that area. If you look at wealth management across market, they're focused more on INR 5 to INR 10 crores and above. But we believe that kind of like technology capabilities that we have and data science tools that we are using now, we can bring to this market can like very effective product, which is reflective for HNI and Ultra HNI and give this campaign like solution to even people who want to just invest INR 1 lakhs and INR 1 crore.

So That is a target for this wealth management. We will start in a normal way, saving HNIs and all that with proper solution, but we'll move towards using technology and bringing this customer, acquiring customers with this ticket sale of INR 50 and INR 1 crore, lower and make them profitable. So for other businesses like for product-based solutions, we have AMC and all that. So that will complete our approach in terms of wealth management. On interest part, I request Vineet to answer that.

V
Vineet Agrawal
executive

Sure. On the interest increase, so when we gave a guidance of INR 40 crores for the 9 months, it was based on the assumption that the bank guarantees for client denominated funds will scale down gradually, and that's what has happened from May 1, 2023 to September 30, the scaling down has been gradual. And therefore, the cost will not be linear. Now that the client denominated bank guarantees have completely gone, so the cost will be higher for this quarter and the quarter after that.

P
Prayesh Jain
analyst

So just further extending that point, you mentioned -- so this quarter still, even if I assume that you have a very limited portion of that INR 40 crores, that assume it's around INR 5 crores again. So the total cost has gone up by INR 8 crores only, where your funding book has gone up, your borrowings on the balance sheet has gone up. So somehow, I'm not able to -- unless your costs have -- your borrowing costs have gone down materially, I'm just trying to understand as to what really kind of brought that -- the increase or so less?

V
Vineet Agrawal
executive

So the funding book has not gone up for the entire quarter. It's towards the second half of the quarter that the funding book has grown. If you see the average is about INR 14.5 million, INR 15 million or so. So when you see the PD book, then obviously, it's INR 19.5 billion as compared to INR 11.5 billion at the start of the year. So it's not a sudden increase that has happened at the start of the quarter. And therefore, funding is also -- the borrowing has also increased in proportion to that. What you see in the balance sheet is the period end number, it's not the average borrowing that is seen.

P
Prayesh Jain
analyst

So is it fair to assume that out of that INR 40 crores, what you have mentioned, a good portion of, let's assume around INR 35 crores, is still yet to come? Or would you want to change that number of INR 40 crores to a lower number?

V
Vineet Agrawal
executive

No, I'll maintain that INR 40 crores because there is growth in business and therefore, there will be requirement of margins to be placed with the exchanges. So we will continue to maintain that guidance of INR 440 crores or so for the financial year.

P
Prayesh Jain
analyst

And just a follow-up on the acquisition costs you've been mentioning customer acquisition costs, if I just divide the total admin costs and the number of acquisitions that made. It used to be around INR 1,500 per customer until for the past 3 quarters, it's coming at INR 1,250. Obviously, the base is much better because of INR 1.3 million was there and INR 2.1 million is now. But is there anything else to read into it, whether the customer acquisition cost decreased and this momentum would continue?

V
Vineet Agrawal
executive

So the admin cost is not directly for the cost of acquisition, there are other elements as well, including the operational cost towards tech infrastructure, the branding cost that we have incurred, the on-boarding cost that is there. So you cannot directly divide the number with the number of clients that we have required. The customer acquisition costs have not moved significantly in the same line as it was earlier. As you know, we don't disclose the numbers, so I'll leave it at that.

Operator

[Operator Instructions] We'll take the next question from the line of Chintan Patel from Girik Capital.

U
Unknown Analyst

So the set of questions. One is on a bit harping on the orders of -- or client orders and all. If you give us some color on the trading seen between a mature client versus new client, as you already mentioned in your opening remarks that the mature 2-year older customer cohorts is contributing most to our booking, net booking revenues. If you can provide color on how the mature clients trade or the order or quarterly order versus a new client, it gives some color that more business is coming. Obviously, intensively, it looks like more business is coming. But how skewed it would be, that I would like to understand what kind of risks you foresee in terms of these orders softening down from the mature? Any thought process or any concern you have that this order might taper down in the upcoming future. That would be the question.

And second, on the cost side, you did mention that we are in line with what we are spending right now. I believe there will be some thought process in terms of number of customer on-boarding at an aggregate level, either we share in the overall demat accounts in the country, and post which the need for spending more towards client attrition will start to decline. So any thought process around that where the inflection point will come or the target that you have internally worked out from that point onwards, the need for investing for client attrition will start to taper off, if you can provide that understanding. These are the 2 set of questions.

D
Dinesh Thakkar
executive

what you're looking at very wandering detail the things that we don't provide what we provide, it is a presentation, Slide 11. I'll ask our revenue [indiscernible] to touch upon that. But before that, let me just cover on like cost side and all that. Right now, it's very difficult to say what impact like this thing like would be seeing in cost in near future. Because what we are seeing, unpriced economy has been very profitable. So we try to spend based on our own kind of metrics that we have, which is a bit proper in terms of how much we should be spending.

So when you see there is a good opportunity to acquire customers, which are profitable, we try to raise that in the [indiscernible]. So overall, I can say, looking at under penetration, this trend seems to be like will continue for a long time because India, if you see hardly 3% to 3.5% people are active in this asset class.

Because the performance of this asset has been excellent. So I don't feel that there would be any kind of like phase where clients would not look at this market or building their wealth or creating a second income. So I will ask Devender to touch upon whatever data I can provide in terms of client or order cohorts and all that. Devender?

D
Devender Kumar
executive

From an overall point of view, if you look at orders from mature clients and new clients point of view, I think -- am I audible?

P
Prayesh Jain
analyst

Yes, yes. Yes, Devender, yes.

D
Devender Kumar
executive

Mature on newness Dinesh already mentioned that. I think we came out with new journeys on the app with simplified usage for the active users, particularly, there are no option and come out. And also for the new users, we have been building a new journey at both products that we had come out.

So obviously, they've improved the journey of new users and active users very robustly on the app. And again also use in to customize it for different profiles of plan, which has come out really, very well in terms of the eventual order that you see on the platform. Obviously, this is also supported by 2 major factors, like market going to all-time high and also multiple expiry days, which provides more opportunity for active traders who participate in multiple days. So they are also added on in terms of active participation of active users, particularly very, very strongly.

But if you look at from a mature and new plan point of view, we see this impact has come equally on both fronts. We have seen real impact on matures, which is very high active users, as well as new users, we are starting to come into the market and start experiencing different financial equity services in itself. So these are the 2 prime reasons that we have seen within the system, which has helped in terms of growing the orders.

P
Prayesh Jain
analyst

So repeat orders, I believe, will be based on the income we generate from sales, right? And given market is also supporting to some extent the kind of ordering we are seeing right now looks like to follow through to continue. But what are -- from the Angel's point of view, the kind of information and the kind of features you are providing. If you can give us how profitable this newer or mature cohorts independently, whether they are making money, which brings them back to the trading activities. Is it what we are seeing currently? Or anything different you are reading there?

D
Dinesh Thakkar
executive

Let me take this question, one second. This market, ups and down is not a new phenomena from the day stock market was in corporate. If you look at like already, we share that content data, what kind of [indiscernible] business we get on year 1, year 2, year 3.

So we had to look at, cohort-wise, revenue whether it continues or not. Whether we look at global era or we look at like global financial crisis era, we have seen market really going to end zone there.

Investor trades lost money. And because they come to the market with limited risk capital. Because they are in generating kind of like revenue. So they are kind of like engaged in the market. Not that they just do trade, they make loss and they start.

So based on kind of the historical trend, we have analyzed that trend in this digital era is far better. in terms of repeat order because when they download an app, app stays with them. So whenever they see an opportunity in the market, then if you are okay, when they enter that an opportunity was not good and they made some losses. But they go back to nowadays, like social media, try to see what's the right approach, where they went wrong, do some back testing. And again, they are active in the market.

P
Prayesh Jain
analyst

Correct. Okay. So the behavior has changed, which -- and the kind of ease of accessing the trading data and app through an app is helping them to take back in the market...

D
Dinesh Thakkar
executive

We have to omit access to experts like what we have built everybody and all that, talking to community and trying to evolve in this time. So all said and then market has done good performance. They have realized it is their mistakes. So they have to improve on that. This generation that way is very like proactive in terms of gaining knowledge and all that.

Operator

We'll take the next question from the line of Rune Garg from Investec Capital.

U
Unknown Analyst

And congratulations for a very good set of numbers. Sir, a couple of questions on your new businesses. Firstly, on the lending products distribution. I just want to understand that what would be your role in the partnership that you had mentioned in the presentation that through AI and ML models, you would be creating to price of your customer. Just want to understand what would be your role in that partnership and what type of products that we will be offering through lending platform. So yes, that's my first question.

D
Dinesh Thakkar
executive

Yes, sure. So sort of [indiscernible] heads this new business division. So I will ask d[indiscernible] sir to answer this. .

U
Unknown Executive

In terms of the product, there will be offering. To begin with, it will be consumer personal loans, unsecured consumer personal loans. And the kind of partnership that we'll be having with the lending banks or NBFCs will largely be in the capacity of a distributor. But we don't want to intend to just be a vanilla distributor. We want to give all the intelligence that we can to our lending partners to help them underwrite better, to help them collect better so that their portfolio performance increases and which, in effect, will mean we can also benefit from better commissions from them over time.

U
Unknown Analyst

Okay. Got it. And sir, any particular targets we have in this lending space in terms of failure more in terms of revenue that we want to reach over the next 3 years?

U
Unknown Executive

So actually, we can't give out that number, but we have very steep aspirations with respect to the credit business will be -- will start slow to ensure that we have delivered the best experience to our customers and scale significantly for that. there is tremendous potential to grow the retail trade business in India.

U
Unknown Analyst

Okay. And sir, second question is on our wealth management business. If I heard it correctly, you said that you will be targeting customers in INR 1 crore to INR 10 crores. Is that correct, sir?

D
Dinesh Thakkar
executive

Let me just add that see, today, if you look at wealth management business now, like it is mostly focused on HNA and ultra HNA wherever ticket size is INR 5 crores and above. So we'll start our journey because expertise lies with people who are managing fund at this average ticket size. But we believe Angel has a unique capability...

Operator

Ladies and gentlemen, the management line has been disconnected, Mr. Dinesh Thakkar. Kindly stay connected while we try to reconnect them. Ladies and gentlemen, the line for Mr. Dinesh Thakkar has been connected. Over to you, sir.

D
Dinesh Thakkar
executive

Sorry, Mukesh, for this. So what I was trying to say that this wealth management piece, currently, it's sold for only HNI and ultra HNI is a very effectively, what we call what they are able to and as well in a right perspective. But if you look at India, India is market where actually we must be able to give similar content solution and wisdom to lower ticket size, like INR 50 lakhs, INR 1 crore kind of ticket size.

So we would like to use the same kind of like solutions what is provided by good wealth managers, usual technology capabilities, new data time is that we are able to have an excess at a lower cost as solution is lower cost. So plan would be start as a proper traditional wealth management business. But try to use our technology and data people so that we are able to sell a lower ticket size, middle just is growing at a rapid suite.

U
Unknown Analyst

Got it. Understood. And sir, any particular targets we have for wealth management over the next 3 years?

D
Dinesh Thakkar
executive

No. I think we are expecting that we'll make like more announcements by last quarter of this financial year. Until now, we have just formulated our areas and what we want to do. But we have to really get into the market to create a proper banking strategy and how to go about for to market and that.

[indiscernible] announcement from us maybe by the last quarter of this financial year.

Operator

The next question is from the line of Sanketh Godha from Avendus Park.

U
Unknown Analyst

First question is on some data keeping questions. Basically, given the other OpEx, it has grown significantly year-on-year in the current year. Sir, just if you can give how much was...

D
Dinesh Thakkar
executive

I was unable to understand you. Your voice is getting cracked.

U
Unknown Analyst

The question I was asking, sir, was that given we have seen a strong growth in other OpEx in the current year. Just wondering, last -- we believe the large part of the growth could be driven by advertisement expenses. So can you just highlight how much we have spent on those advertisements? And then how sustainable it is going ahead? That's point number one.

On data keeping, I have 2 more questions. One is if you can break down that INR 8 crore expense increase in the interest -- it can be saw is largely because of the changes with respect of streaming of the client money or bank bearing is not available. And lastly, given the Chairman has spoken about instant in its settlement, I just wanted to understand the impact on us is the float income or what kind of float income we earn on the client money, which could potentially disappear if instant settlement gets implemented. That's on data keeping. And a couple of questions on authorized assisted channel. Just maybe you answered if I can ask that one.

D
Dinesh Thakkar
executive

Vineet, can you take all the 3 questions?

V
Vineet Agrawal
executive

Yes. So about the cost that we've incurred on branding, we don't disclose that. So it's built in the other expenses. As I said, majority of the expenses increasing the expenses towards other expenses has been because of the growth in the client acquisition from 1.3 million to 2.1 million, plus the on-boarding cost. And there is the cost that we've incurred for the branding campaigns that we have run during the quarter. That's on the other expenses part.

On the interest, again, I mean, I'm sorry, I can't disclose much details beyond the data that we've shared. But as I said, the increase in the margin requirement will go up with the client denominated margins. Bank guarantee is getting abolished from 30th of September. So there will be this incremental cost on the borrowing and the BGs for the next 2 quarters. We've given a guidance for INR 40 crores during the 9 months 'til 31st of March, and we maintain that.

U
Unknown Analyst

And lastly, when you talk to income on client money?

V
Vineet Agrawal
executive

Well, that's something which will pan out in the future. Right now, we have already shared a lot of information about the kind of income that we generate from clients, margins, et cetera. But as and when the instant settlement gets implemented, we'll see how the margins move and then we'll be able to give a guidance on that.

U
Unknown Analyst

Okay. Perfect. Sir, the last -- the second question which I had was on the authorized channel or assisted channel model. Given we have been incrementally focusing on this business, and to the extent I understand this is a pass-through model. Supposed if you are earning INR 100 by distributing a loan or a mutual fund or bring any product on financial or on insurance in that sense. So is earning INR 100, probably you need to pay INR 90 or INR 95 to the authorized person and INR 5 is what you might retain. So I just wanted to understand how exactly you are going to build this model. And if I look at this model in silo, then easy to safe to assume that the EBITDA margins of this business will be invariably lower compared to what you do in the direct business model right now.

D
Dinesh Thakkar
executive

Just I think you have to look at this model in a different way because when we talk about margins and all that, we don't take the cost. So that cost is taken by our assisted channel business partner and all that. So this model is very profitable and very kind of helpful in terms of cyclical times and all that. It's all costs taken by our biggest partners. So what we bring on the able is like affiliation with good manufacturers.

And because of scale, we are able to negotiate a better price. We are able to use kind of like solutions that we have and we can customize to the level where our business partner will be able to store their customers better using our AML tool and data science that we apply in our platform. So we bring in a lot more than just kind of like give an access to some manufacturers. But when it comes to managing customers' asset portfolios, distribution, understanding, being more intelligent in terms of understanding asset allocation, that is where our USP comes in. That is where a platform like NHT and this are used. So that this question assisted business partner is able to acquire more customers at a lower price. He is able to get more kind of like creative material in terms of communicating with the customer and acquiring more. And when it comes to serving also, we are able to tell him what are the products in the market and how each and every individual portfolio is performing. So that's a huge sense of support, which like our general partner gets. Vishal, if you want to add anything on this?

U
Unknown Analyst

Sir, just a follow up on that given in our broking business, to the extent I understand it is 70-30 sharing. So do you expect that 70-30 sharing to operate in these other products also? Or it will be different meaningfully from what we experienced in broking business?

D
Dinesh Thakkar
executive

So every business model is desired by what kind of an investment we are doing and what are we to that.

Where there's a huge opportunity of deploying our kind of like OpEx or CapEx with genres reasonable good decent kind of like returns. And it is scaleable. So we would like to focus on that.

Margin is not that important. So 70-30, it can be 50-50. It can be 90-10. What is important is that, what is the scale of that business and what we bring on the table, and what kind of returns we'll get on investments we are doing. So I think because all these decision does not require huge capital. So it ultimately boils to business, which is more sustainable. Because when we acquired these business partners, they are in the market for -- like we have seen our business partners being in the market for like 10, 10, 20, 20 years. And plus whatever margins we share with them, ratio says that we both are profitable.

So in that sense, it is not less profitable. It is kind of something which is required to gain more market share in which business we get into, to have a kind of like a diversity in terms of acquiring customers from mature channel, they want to use our service. So objective of bringing into assisted business the thing is much wider than just looking at margins.

So I believe that India is still like there are digital natives. There are people who want assistance. And those who want assistance is also a big market. Combined with technology platform, what we can do now, it can create 1 unit U.S. Yes, Nishan.

U
Unknown Executive

Yes. So just building on what is a sector. See, I mean, there is a role that channel plays and the role that is acquiring customers and bringing them on to our fold is primarily what they are focused around. And what the role that we, as service providers play would be kind of creating those products, creating those customizations to be able to cater to that specific need. And therefore, both the parties involved are adding value, and therefore, they are being reimbursed or they are able to charge for the value that they create. I think I would like to look at it from this perspective and not from a margin sharing perspective.

U
Unknown Analyst

Got it. Got it. Perfect. And last one...

U
Unknown Executive

A perfect example for that matter to kind of help you internalize this point. Let's say, as far as the lending model is concerned, and let's say, if I was to tomorrow time with the DSAs of the world, and I play a role of LSP, a loan service provider. Now in a scenario where I help them identify a specific cohort where we are able to charge a specific rate of interest. And therefore, creating enough lubrication in the system for them to be able to charge their DSF, which they, in any case, would be getting and on top of which I am able to add value by that specific cohort and fulfillment of those journeys. And therefore, I am able to bring in my margin.

It could be in form of LSP fee or it could be in form of upfront on-boarding fee. So these are different value adds that one is creating. And the overall proposition, therefore, becomes more robust.

U
Unknown Analyst

Got it. Got it, sir. Perfect. And lastly, given you have raised on the lending point. Just wanted to check that if the loan market you want to get into, whether ultimately, you will even start the payment aggregator model where the throughput through your channel will be significant. And therefore, the personal loan disbursement thing can be meaningful. Or you want to be a pure DSA or an aggregator of the DSAs kind of a model?

D
Dinesh Thakkar
executive

Well, this is a wider question, and I would request [indiscernible] Taneli to respond on this .

U
Unknown Executive

So we would always like to be a distributor of this product. We see a big opportunity in lending. If you look at lending market currently, no. So like what is missing is last mile kind of like approach to a customer who are into remote areas and all that. And when you look at digital may to young people, they want to consume everything on digital platform. So we would not like to underwrite risk and all that where we don't have some competency. Our competency lies in creating an access to the market, creating a huge distribution network and co-sharing that can fund like revenues with our [indiscernible] collection and all that. .

D
Dinesh Thakkar
executive

In regards to your payment greater question, see, I mean, there are different signals that different companies use for underwriting purposes. Now even that we are not necessarily into the underwriting part I'm not sure if that is the signal we are using. I mean, payment aggregators using the transaction is able to underwrite the customer who's actually intending to borrow. So the perspective changes.

Operator

[Operator Instructions] We'll take the next question from the line of Hardik Jain from Whitestone Financial Advisors Private Limited.

H
Hardik Jain
analyst

Sir, this expiry changes happened, I think, from the 1st of September. So if you can just give us the understanding how the volumes have moved up in the month of September versus August because I think now it has become a regular feature, and it will give us some kind of assessment how the volumes can move in this quarter also. So this is my first question.

And sir, in terms of ancillary revenue, you said INR 90 crores is the kind of refund that we get because of our turnover. So I just want to understand, isn't it required by the regulation to charge on an actual basis to the client there are no charges. So that is my second question.

Secondly, sir, you have also mentioned that we -- earlier, we were not able to give [indiscernible] futures and options on our system, which has started, which you mentioned in the presentation. So when did it start, does it -- did it contribute something to the revenue in this quarter or it started after the quarter? So yes, these were my few questions.

D
Dinesh Thakkar
executive

Yes. So on expiry, we would not be able to comment much on that because this all changes which happened has been factored in our quarterly results. So you do take some information based on numbers that we have shared.

And on charging or seeing rate to customers, we charge as per slabs. And like that is where there, that is kind of like whatever is like applicable to different tales based on that volume, which are there. So it is in line with regulation. And third, maybe -- sorry. BSE, we started just last week. Still, it is not fully rolled out. The impact of BSE is not fully seen in this quarter.

Operator

Next question is from the line of Sarvesh Gupta from Maximal Capital.

S
Sarvesh Gupta
analyst

I think most of them are already answered. Congratulations for a very good product. Nevertheless, one question that I had in my mind was on this unique SIP registered. So this is certainly reaching a very significant sort of scale. So at the moment, have you had any sort of discussions with the AMCs or thought any -- you have some thoughts about how to monetize this thing? And also, given that you are also going to launch your own AMCs do you see any play between these 2? And how do you see any monetization overall to come up in this sort of a segment?

D
Dinesh Thakkar
executive

Yes. So thank you for your question. See, if you look at like our discussion, like since a few quarters, we were focused on Super App, and we strongly believe individual who comes on our platform. We should get everything which that cross needs to achieve these financial goals and all that.

The first step was like at booking to introduce some other asset class, where we see some traction. The positive thing is that we were able to see people like more services on the same platform. That's the reason we just launched in active.

In 6 months, we are #2 in terms of unique register. So that clearly shows that people who are on one app, they are ready to buy multiple services, multiple products provided we are able to give a right journey. So that is where our uniqueness in terms of building a Super App, building an engine which is more guided by data bank and AML tool is very effective in terms of understanding what the customer wants and selling it at the right time. So we don't look at earnings from every transaction.

What we look at that customer should be engaged on our app. If that person is engaged, today or tomorrow, they're going to consume more -- consume more services on our platform. Some products can give us good revenue, some products may give less revenue. But overall, what is important, what is cost of acquisition and what is the lifetime value of this customer.

So we believe until now, none of the industry has really focused on lifetime value, which is much beyond what we can imagine. So because we are acquiring customer who is at the age of 25, 26. If you look at their lifetime value, it will be much beyond than what we have currently projecting. Today, if you look at like we have given numbers on that our cost of acquisition to until now in 3 years, we're able to record almost 8x from our cohort. But if you are able to add few more services get more engagement, more secular we believe that this parameter would have a positive impact. So that is where our focus is. Now your question on our own AMC.

Yes, we believe our AMC would be totally on past management. I believe that asset management is the right product for young individuals who are starting their journey. One, because ETF is an easy product, diversified product and it's easy to divide it into sets and invest regularly. So definitely being into management, what is going to help us is our distribution network, which is huge. So that way, there is a synergy, there is a kind of like advantage position that we have, and we are going to deliver that.

Operator

[Operator Instructions] We'll take the next question from the line of Wari Banger from PICO Capital.

U
Unknown Analyst

Sir, I just wanted to ask on one thing. From July 1, I think a lot size of bank has reduced from 25% to 15%. So is there an impact of that also because a same trader would have to put in more number of orders for the same value that he's going to trade. And from that sense, would it be structural going forward as well? Because that number would remain the same, right, from July, August, September to the coming months now.

D
Dinesh Thakkar
executive

Bhavin, can you take this question?

B
Bhavin Parekh
executive

So the bank FT contracts has definitely changed from 25% to 50%. But it has got actually added in the number of trades that we have built we have been reporting till now. So obviously, there are a set of customers who would want to actually trade a particular quantity. For them, the number of orders would have gone accordingly. .

But to see whether this impact has actually caused the rise of orders would be -- we will not be able to mention on that particular thing. But yes, there are certain customers who place orders based on number of lots. There are certain customers who place based on the number of quantity that they want to take.

Operator

We'll take the next question from the line of Pallavi Deshpande from Sameeksha Capital.

P
Pallavi Deshpande
analyst

I just wanted to understand on the ESOP cost, if we factored in the -- we've had these new hiring. So what would be the cost we can sustain for the year?

D
Dinesh Thakkar
executive

Vineet, can you take this question?

V
Vineet Agrawal
executive

Sure. So on the ESOP cost, the guidance remains the same. Overall, for the year, we had estimated the cost to be about INR 80 crores. The cost for new subs that we have granted and expect to grant will be in the range of about INR 55 crores, INR 60 crores. So we maintained that same guidance.

P
Pallavi Deshpande
analyst

And secondly, on the ad spend. I think you mentioned that will that be ramping up now as the new business is coming in the loan business and AMC. Do we see a ramp-up further ramp-up in then from the current run rate?

D
Dinesh Thakkar
executive

So for the lending business and other distribution businesses, we are actually not spending money to acquire those customers. We already have a large enough customer base internally who we could cross-sell and create a large enough portfolio there. In terms of spending money to acquire customers this year and hence, brand spend increasing, that won't happen.

Operator

The next question is from the line of Bhuvnesh Garg from Investec Capital.

U
Unknown Analyst

Sir, just a data keeping question. Firstly, if you can provide the interest rate that we charge on our MTF book. And secondly, if you can provide the breakup of our interest income into our MPS income and then FDA interest income, please? .

D
Dinesh Thakkar
executive

Vineet, please answer this question.

V
Vineet Agrawal
executive

Yes. We got 18% annual for the MPF lending that we do. And of the total interest income that we have reported, almost 65% is from the fixed deposits and margins that we face with the exchanges and about 35% is from the March trading.

Operator

The next question is from the line of Ruchit Sharat from eye Wealth Management LLP.

U
Unknown Analyst

Congratulations on a good set of numbers. So I wanted to ask, sir, when do we see this AMC, the lending and the wealth management business starting up. Sorry, if I'm repeating the question, I must have missed it. So if you could just give a little clarity on that.

D
Dinesh Thakkar
executive

No, sure. No problem. On AHN and lending, I will ask Soroban. We need to take this question. On wealth management, it's too early to comment anything on when it will start. So right now, we are at outside conceptualizing stage. So maybe you are more about this wealth management in next quarter in detail.

On AMC, Vineet, can you just elaborate and on lending later on then sort of can?

V
Vineet Agrawal
executive

On the AMC business, we've already filed the application for final approval early August. We are in the process of building up the business infrastructure and the tech infrastructure and creating partnerships with key vendors. We expect to conduct an on-site inspection once we are ready with the entire infrastructure and the payment place.

And thereafter, usually it takes about between 1 to 2 quarters for SEBI to give their final approval. So most likely, we should be able to -- we endeavor to get our final approval either in the fourth quarter or early first quarter of the next financial year.

D
Dinesh Thakkar
executive

On the credit business side, most likely before the end of this fiscal, we should be able to go live. .

Operator

The next question is from the line of Sumit Gankar, an individual investor.

U
Unknown Attendee

My question is related to ARCC. Can you provide the numbers for this quarter and previous quarter?

D
Dinesh Thakkar
executive

I'm not sure. David, did we provide ARCC?

U
Unknown Executive

We do not provide this information and this is internal information. So we don't provide any such information.

U
Unknown Attendee

Okay. Sir, I have 1 more question related to derivative market share. As I can see, the derivative market share is all-time high. So can you mention some reasons which helped you to gain 26.2% market share in this quarter, which is by almost 200 basis points at 150 meters project.

D
Devender Kumar
executive

I think as mentioned earlier, we had a number of new product journey improvements that we have done on the product front, which is helping the active users to engage in a much more wholesome way, which has now started contributing in the right way in terms of participation. That has been the major impact now where we have made sensible fees. We have got basket orders. We have got offers. There are multiple product journeys improvement that we have done, which is causing easier usage by users who are active with us particularly. So that is what is majorly helping the overall movement of the derivative market share as well as a result.

U
Unknown Attendee

Okay. I have a general question. Just as you have good market share and very good. Recently, high 6 [indiscernible] of report on the profit and loss retail first half. We said that 89% [indiscernible]. And so can you tell -- [indiscernible] so is it that the remaining 10% of our earnings, the losses made about 90%. Or is it that the DII, FII or banks who are also trading individual, they are referring the profit? What is your equity?

D
Dinesh Thakkar
executive

Sumit, it's a good observation. I think report does not give detail about if 9 are losing. As you said, it's a zero sum game, minus expenses. Where the other part is going? Can it be going to people who are into kind of like arbiter business or fair were heavy. But I think the support is not clearly mentioning that side. So I would not be -- like we would not be the right person to answer this. We have to check with regulator on that.

Operator

The next question is from the line of Hardik Jain from Whitestone Financial Advisors Private Limited.

H
Hardik Jain
analyst

Just one bookkeeping question. Sir, how much cash would we have on our books other than the client margin, so our own cash?

V
Vineet Agrawal
executive

Today, we deploy about INR 1,500 crores, INR 1,600 crores of our own cash other than the money that is there in long-term investments and assets. So this is money that we deploy for margins and for the other working capital requirements.

Operator

The next question is from the line of Pallavi Deshpande from Sameeksha Capital.

P
Pallavi Deshpande
analyst

Yes. So just wanted to understand on the loan business, would we be been targeting since we said it a cross-sell, more of the Tier 2, Tier 3 customers and that [indiscernible] to ask them?

D
Dinesh Thakkar
executive

What is the question, please?

P
Pallavi Deshpande
analyst

The loan business, for the loan business, since you mentioned it's going to be more initially the cross-sell. So does that implies that we will be having more Tier 2, Tier 3 and Tier 4 kind of customers for that?

D
Dinesh Thakkar
executive

So since we are not acquiring customers fall lending, we are cross-selling to our current base. So whatever the composition is of the base, that will be the competition of our lending business as well.

P
Pallavi Deshpande
analyst

Right. So that's an area pretty much if not by the current impact player. So I mean, in terms of credit.

D
Dinesh Thakkar
executive

That is where the opportunity lies, right? One market itself is under-penetrated and more and more lenders and issuers want to enter that market. And since we have a very highly engaged base in those same geographies, we have a very high potential to capture that market.

Operator

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Dinesh Thakkar for closing comments. Over to you, sir.

D
Dinesh Thakkar
executive

Thank you for joining us on the call today. I hope we have been able to answer all your queries. Should you require any assitance, please feel free to get in touch with Hitul Gutka, Head IR; or SGA, our Investor Relations advisers. Good day.

Operator

Thank you, sir, and the members of the management. Ladies and gentlemen, on behalf of Angel One Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.

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