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Ladies and gentlemen, good day, and welcome to the Angel One Limited Q3 FY '23 Earnings Conference Call. [Operator Instructions].
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. Thank you, and over to you, sir.
Good morning, and welcome, everyone. Thank you for joining us today to discuss Angel One's Q3 FY '23 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 our website.
For today's call, Angel is represented by Mr. Dinesh Thakkar, Chairman and Managing Director; Narayan Gangadhar, CEO; Vineet Agrawal, CFO. We also have the senior leadership team of Angel, along with SGA, our IR consultants. We will give you a brief overview of the operational and financial performance for the quarter gone by, and the floor will be open for Q&A thereafter.
As a reminder, I would like to inform you that the company does not provide any operational and financial guidance. There may be some forward-looking statements during the call, which must be viewed in aggregate with the risks that the company faces.
With a brief introduction, I now invite Narayan Gangadhar for his opening remarks.
Thank you, Hitul, and good morning, guys. Good morning, everybody. First, I would like to wish everybody on the call a very happy and prosperous New Year. In 2022, India outperformed global markets by approximately 37%, which reflects government's economic measures to facilitate business. Even the World Bank in its recently released report suggested that India is expected to be amongst the fastest-growing economies and expects India's monetary and fiscal tightening to be less pronounced. All of this will drive India's growth of capital markets, which has more than 108 million demat accounts as of December 2022.
India's young demography strongly favors technology assimilation and Angel is well positioned to cater business population through our digital products and engagement tools. In Q3, we rolled out the Android version of our Super App to the first batch of our clients. With this, the app is now available on all platforms, iOS, web and Android. The Super App builds the bridge for us to become long-term collaborators for our clients in their journey of [ registration ]. Since Android is a large base for us, we have been very scientific in this rollout.
To give you some color on scale, in terms of daily log-ins with only 15% rollout in December 2022, Android is 1.2x, that of iOS in scale. I'm very happy to share that this transition has been steadily gaining acceptance with our clients. The customer council, which was formed in Q2 of FY '23 proactively assessed client experience and received feedback post the Android rollout, which were incorporated into the app. We recently greenlighted the proposal to scale out the launch and deployment to the entire population.
So let me give you some feelers about the initial feedback of our Android Super App. The app has been architected to handle plan at scale, and I'm pleased to share that the app functioned extremely well when the floodgates were open and large volumes of orders were seen in Q3. The app recorded an uptime of around 100%. Typically, there would have been some softness when such migration happens, but we have not seen any. Order per client for those migrated to the Super app versus the -- vis-a-vis their activity on older app continues to hold up. The Play Store rating of 4.2 as of December reflects the high level of acceptance by our clients. Early trends in overall [ NPS ] demonstrates superior client experience and higher satisfaction as compared to the [ old app ].
Now we continue -- we also focused on incorporating changes to adhere to various compliances, like implementing 2 factor authentication, which offers an incremental layer of security to all our clients and making changes to display trade and charges upfront. We successfully completed the second round of clients' funding payout, without any impact to our business. We built KYC 2.0 experience for our mobile clients from scratch. In Q3, we also introduced mutual fund services on all 3 platforms of our Super App, thus making the transition of the app to become a true Super app. Efforts undertaken in Q2 to revamp our website are paying off as well, as witnessed by high web traffic in Q3 FY '23.
On the tech side, we continue with our regularization effort. We reloaded multiple back-end APIs. We removed various interdependencies and hardened our systems, and we deployed engineering excellence pattern by automating our processes and various tools. We also deployed new machine-learning algorithms to improve the effectiveness of our online campaigns. Our focus on data science, artificial intelligence and machine learning is yielding positive results across acquisition, onboarding, engagement and communication. We've continued to acquire close to 1 million clients even in a tough market, thus taking our overall client base to 12.5%. More than 95% of the clients were acquired from Tier-2, Tier-3 and beyond. With this, our share in India's total demat accounts expanded to 11.6%, as of December 2022.
Angel has been amongst the few players to consistently maintain a positive trajectory in active client base. We have improved our market share to a record high of 12% as of December 2022. I am extremely happy to share that we also have now attained the third position amongst all brokers in NSE active clients. The robustness of our business and superior client fabric is demonstrated from our turnover market share, which stood at 21%. Our clients transacted an average of more than INR 14 trillion daily to 226 million cumulative orders in Q3 FY '23. December was our second best month in terms of average daily orders and best in terms of average daily turnover. I'm happy to share that the Board of Directors have approved the distribution of 35% of orders post-tax profits, as a third interim dividend to our shareholders.
With this, I now request Mr. Vineet Agrawal, our CFO, to brief you on the financial performance of the company. Over to you Vineet. Thank you.
Thank you, Narayan. Good morning, everyone. I'm pleased to share with you that we have yet again reported strong operating and financial performance, despite a challenging environment. In quarter 3 of financial year 2023, we reported our highest quarterly profit of INR 2.28 billion. Our gross revenues grew nearly 2% sequentially to INR 7.6 billion, despite 2 lesser trading days during the quarter. Gross booking income continues to remain the mainstay revenue driver at INR 5.1 billion, contributing 67% to our gross revenues. Interest income, which includes interest on our client funding book and interest earned from deposits with exchanges, grew 10% sequentially to nearly INR 1.4 billion, contributing 18% to our gross revenues.
Better yields on deposits have augmented this income stream. Ancillary transaction income degrew by nearly 4% sequentially to INR 627 million, accounting for over 8% of our gross revenues. Depositary income contributed about 4% to our gross revenues at INR 270 million. Income from distribution of third-party products grew nearly 17% sequentially due to uptick in our IPO offerings accounting for 1% of our gross revenues. During the quarter, we have reported a onetime capital gain of approximately INR 90 million, arising out of the sale of an unused office property. This forms a part of our other income.
Our quarter 3 financial year 2023 gross broking revenue is further split as follows: Share of F&O segment remained stable at 82%. Contribution of cash segment came down marginally to 12%. Share of commodity segment grew to 5% and share of currency segment remained flat at 1%. The average revenue per client, which is calculated on the entire quarter ending client base, stood at INR 398. This trended lower, primarily due to a higher share of new-to-market clients. These clients initially have a subdued activity level, which normalizes over time. Despite this, we have been able to maintain our growth and profitability metrics.
On a cohort basis, we have seen revenue per client mature, as they progress into year 2 and onwards on our platform now. In contrast to our pre-digital models, where year 2 revenue per client was significantly lower than year 1. Since we have been acquiring clients at a robust pace over the last 2 years, their share in net broking revenue continued to dominate at 66% in quarter 3 of FY 2023.
Here, I wish to draw your attention to the fact that some of our older clients are now moving into the next aging bucket of 2 to 5 years. As a result, we are witnessing an increase in our net broking revenue from this cohort, thus indicating longevity and stickiness of clients corresponding to their activity levels.
Our net broking revenue under the flat fee plan continued to witness strong momentum, contributing to a significant 86% of our overall net broking revenue. Share of total net income from our flat fee clients to the consolidated total net income grew 1.3x to 86% in quarter 3 from 67% in quarter 3 of FY 2021.
In quarter 3 FY 2023, our overall OpEx, net of fees and commission payout and finance cost, was lower by about 0.4% quarter-on-quarter. The profit margin for the quarter expanded sequentially to 53.9%. While we have consistently delivered healthy operating profit margin, we believe a more sustainable margin profile for our business is in the range of 45% to 50%. With the launch of the Android version of our Super App, we plan to spend more on its promotion for the next few quarters.
Depreciation of assets for the quarter was marginally higher at INR 80 million on account of capitalization of certain assets. Our consolidated earnings per share for the quarter was INR 27.4 at INR 800 million, this is the highest absolute dividend payout by the company in any quarter, taking the total dividend across 3 interims for FY 2023 at almost 97% of the total dividend payout for FY 2022.
On the balance sheet side, cash and cash equivalent increased to over INR 62 billion. A period ending client funding book was at about INR 13.8 billion. Our period-end borrowings were INR 15 billion. These were utilized towards financing our client funding book, margins with exchanges to fulfill the 50% cash margin requirement on behalf of the clients. Our investment in the Super App and commissioning of new data center led to an increase in our fixed assets to INR 2.3 billion as of December 2022. Our net worth increased to over INR 20.6 billion as of December 2022. The 9-month FY 2023 annualized return on equity stood at 45.6%.
With this, I conclude the presentation and open the floor for further discussion. Thank you.
[Operator Instructions] The first question is from the line of Swarnabha Mukherjee from B&K Securities.
2 questions. So the first one is, one that your comments on the interest income part, the number has come higher sequentially. So if you could split this out between the interest yield and then the margin funding book and that on the deposit fundings expensed and provide comments on how your -- [indiscernible] book has it moved or have you passed on anything -- borrowing cost increases to your customer? And also comment on this [indiscernible] part of the business.
Vineet, can you please take this?
Hi Swarnabha. The overall interest income has -- the reason for the increase is twofold. One, the yields have increased by about 50 or 55 basis points and the overall quantum has increased by about INR 550-odd crores. So that's the reason why we've seen the increase in the interest income. And yields on the client funding book remain the same at about 18% per annum and the NIM is also similar to what it was in the past, at about 8%, 9% annually.
So just to clarify sir, so when you say that the yields have increased by 50, 55 basis points, since you are saying that.
[indiscernible] deposit side.
Okay. Okay. And what would be the quantum of the deposits that you -- how does it extend in Q3?
It varies. So on an average, it would be about INR 4,000 cores, INR 4,500 crores.
Okay. Okay. Okay. That's helpful, sir. Secondly, on the number of orders. So I understand that this quarter, we were missing, I think, a couple of trading days. But apart from that, also if we factor that in, I think, given generally the run rate of orders that you have -- I think we would not have done it significantly higher than what we would have done last quarter, even if there were 2 more additions on this. So wanted to know your thoughts on totaling, what is the experience you are seeing on this side? Are the orders now coming with higher number of lots, because your ADTO is increasing. And what are the steps you are taking to increase the number of orders, because I think that is the primary revenue driver rather than the ADTO part. So wanted to know your thoughts on this?
So see, first of all, as we announced in the results, right, we are at a point where there is a lot of -- there are 2 trends that are going on. First, there is a macro trend and the macro trend of softer markets are already visible in many sectors, as well as many of our own competitors also. We are seeing the same kind of trend line, as far as market softness is concerned. Now secondly, what has happened is, in terms of lot sales or anything, we have not seen any change. So that has not budged.
Now in terms of people trying to trade and people's activation levels, they are slowly changing, as more and more people try to test the waters, because with rising interest rates, there is obviously a little bit of slowdown in terms of the natural propensity to enter into the equity markets. That said, I believe the fundamentals of the business are holding on pretty strong, which is business already in terms of [ all accounts ]. So hopefully, that answers your question. But in terms specifically on ADTO, there has been no -- or lot side, there has been no witnessable change. There are other changes coming to the product, which will influence how our customers experience the broking journey, how do they experience mutual fund journeys and such, which will impact the overall order comp going forward.
Sure, sir. What I was trying to understand was that, if we were to focus on the revenue growth side. Then from your comments, I sense that it could be a possibility that given the softness in the overall macro [indiscernible], we have kind of come closer to a peak for the broking business. So I just wanted to understand -- because of the fact that the mutual fund side, you will be doing a direct kind of a business. So what would be your focus area on the revenue growth, since broking might be for the time being, might remain a little bit [indiscernible].
No. So I didn't broking was peaked. All I'm saying is that in this particular quarter, there has been softness, okay? Broking market, we are at least another decade from it even starting to peak. It's a long -- I expect the next decade to 2 decades to be a serious bull run for the economy as well as a serious bull run for also all the players, and especially digital players in the business. So the long-term future prospects remain extremely strong.
However, what has happened, is given how the dollar has fluctuated in the last 3 months, it has gone up and down almost by 10% or 15%, just within the last -- just within the last quarter itself, right? And while our country, while we have stayed largely insulated, there are still peer pressures in terms of how the banking system has responded. Because of that, obviously, with interest rates rising, people have a natural tendency in such markets to go, look to adjusting their risk profile. Naturally, more people, if you look at the number of [ LDs ] that were opened this quarter, it's also at all-time high, okay? So naturally, there is an inverse correlation there.
But what we see, is we see this strength stabilizing. We see this to be a trend, which will kind of stabilize out, as we especially enter into the budget season, which is coming up in the next month or so. And again, we expect the markets to revert back to the [ main state ].
So overall, from a macro point of view, I think there is no -- we don't -- at least I don't see any slowdown coming. That said, I think the dampness will be there for a few -- for a month or for a quarter, till the uncertainty settles down. So that's what I was saying.
As far as mutual fund is concerned, you made a statement that we are going to go with direct, right? And that is absolutely correct. And our entire strategy actually is basically with the Super App. We want to give our customers this diversification to enter into -- to enter and consume new financial products, which today obviously we are not providing. So we expect that with that, the overall stickiness from the app to go up, and the overall trade propensity also to go up.
Okay. Got it. Got it. Sir, very helpful. Last couple of questions, big ones, sir, one would be, whether we should see any kind of impact on your financials due to the [indiscernible] agreement, that's one. And if I could get your comments on how we could see the employee benefit expense, whether it has now come to a peak level, and why a slightly...
I couldn't understand your question. Your -- I was not able to hear, it's cracking up. Can you repeat the first the third question and then we will answer the first separately?
So one was the impact of T+1 on our financial. The second was employee benefits expense, whether -- it has -- we have done INR 90 crores. So should we consider this to be somewhat closer to the peak, or should we expect even some more inflation there going ahead? And thirdly, tax rate is slightly lower this quarter sequentially. So any reason for that, and how we should expect it to...
You answered you asked 3 questions in that 1 question. So let me just go one by one, okay? First is, let's start with T+1, okay. T+1 actually, I would like either -- Bhavin, can you take this call on T+1? What impacts are we seeing from the offset?
Sure, sure, Narayan. T+1 is going to be very beneficial for the customers' overall pay-in, payout cycle. And marginally, we would see a drop in the margins, which exchange collects on the cash market segment. Today, FNO is already on T+1. Cash market was T+2, and that is where 2 days of margin used to get deducted, which would get released even for the customer, as well as further brokers. And that would have a little benefit on our overall deposits that we keep with the exchange.
But as far as customer is concerned, T+1 actually becomes very, very beneficial, because every settlement happens on the next day itself, so that they can take a rational call in terms of -- in case if they want to sell it in the short term, they would be able to do it. So this is going to have a very positive impact overall.
And the next question -- and just to actually add to that, from the product and tech side, this actually is a great win for the customer, because it also lets us introduce some interesting journeys, which historically we were not able to do, because the fact that the processing time has shrunk, it opens up other opportunities for us, to improve the experience. So it's a great thing for everyone.
So the second question was around taxation, the tax rate. Vineet, just can you quickly take that and then I'll answer about the employee cost. Go ahead, Vineet.
Yes. The headline tax rate remained same at about 25% or so, a slight variation due to the impact of deferred tax calculation. But overall, it's in the same range at about 25% for the quarter.
And your final question on employee costs. See, I think the costs are already there. You've already seen the cost for this quarter. But you asked a broader question. The broader answer is, see, we are currently in the growth phase of our business. We are -- for Angel, this is like day 0, just getting started. We just went public few years back, and we are a hypergrowth company. For the next few years, we are going to continue investing in our people. We are going to continue investing in our hardware. We are going to continue investing in our process. That is going to result in extra spend. But we have always said, our goal is to operate the business in the 45% to 50% ballpark of the operating -- we want to keep our opinions that way. And so far, we have been successful in keeping it. If you look at the record over the last 2 years, in fact, we have done an excellent job. It's been, in fact -- this quarter, it's [ hit ] at an all-time high of 50% plus, 54% actually, right? So our goal is to operate between 45% and 50%, and that's the envelope we should be looking at.
The next question is from the line of Sahej Mittal from HDFC Securities.
So firstly, just one clarification on the customer payback period -- customer acquisition [ costs ] payback period, is it still building up at 6 months?
Yes. Yes. It is holding up at that -- in the 6 month [ frame ], as you have mentioned?
If that is the case, then the customer drop-off rate seems to be very high, because the new customers acquired are turning activate most in the next 6 months of acquiring them. But the increase in your NSE access clients see indicating that the old -- that the drop of rates for the old customers remain very high. So can you give some comments around that maybe around -- yes so that's the first question.
Yes. So I don't think this affects -- your data is correct, but the conclusion is not something I agree with, so let's go one by one, okay. So first thing is that you remember this year, we are -- when we report the data on RPF and everything, it's average data, okay? It's average over all our cohorts, which we have acquired till date. Now we have had a couple of events through the year, which are outlier events. All of us, we went out -- we went out of it, [indiscernible] during LIC IPO. Including that period, we acquired a lot of customers. And that base, which was required during that period, obviously, that base having performed as we would have left, because [ LIC ] itself was a damper and post that, there was really -- the country never really even recovered from the aftershock of that.
So what we are seeing is, as we continue to scale our acquisition strategy, we continue to focus on those Tier 2 PSB customers and there, we don't see a change in the activation rate at all. In fact, we are still activating close to 50% of our customers within the first 15 days. So I would like Prabhakar to add a few words here in terms of the acquisition side, and I will switch to Devender, who will answer your question about the -- how the guys are performing in terms of cohorts. PT, you want to take over?
And maybe I'll just add -- maybe I'll just add something to this. So maybe keep aside the addition which you did in the last 12 months, but if you can also talk about the customers which you acquired prior to last 12 months, so more than 1 year, but less than 2 years. So how is that customer doing what? So for example, you are seeing 10 orders in a quarter, then what's the trading intensity now? So is the easing to some season on this?
Okay. Good. Okay. That is not the thing you asked in the first place. But okay. Different question, no problem. I'll answer that. Okay. See, this question around how the cohorts are doing. I'm going to hand over to Devender to answer in a few minutes here. But overall, what has changed, and this is very important for all of us to understand, if we were operating this business with a length of breaking in 6 months, 7 months, whatever it is. Okay. But fundamentally, we never -- we never really had a lens on lifetime value, okay? Whereas now, the company has had more than 4 years -- 3 to 4 years of operational data of running in a discount broking, fully digital environment. We have never operated in this model before that. Only last 3, 4 years, we have operated in this model. And we have a lot of data. Now, it shows that the cohort behavior and the revenue from 1 year to the next is only increasing.
So I will now hand it over to Devender, because we are trying to shift our acquisition strategy to go from a 3 months, 6 months breakeven horizon to a lifetime deal. And I'll be talking more about this in the call. But I want Devender now to jump in there, and give you some data on how the trend line looks like, as far as cohorts are concerned.
Hi, Mr. Mittal. I think just to reincorporate what Narayan has said, when we look at clients, I think the growth -- the pockets of growth that is happening in India is coming from Tier 2, Tier 3 and Tier 4 cities. And our focus has remained laser-focused on reaching these places, so that we become part of this growth that is going for us. And we have kept the guardrail of -- maintained the profitability around 6 months. That is what has happened. So as Narayan mentioned, during the IPO month, we went all guns blazing, and we acquired a lot of clients who wanted to do LIC IPO. That particular cohort has not performed similar to other quarters, but that's an aberration.
Coming to second question, how is the 12-month old client really performing? And our data is saying, now since we have data of clients acquired in at least last 3 years with a discount broking model, we are able to see that the second year revenue for the clients who have the second year, is almost similarly higher in comparison the first year revenue of the clients. So we are seeing stability of revenue of the client, as they move to second year, third year and fourth, and we are seeing a similar trend from second year and third year, these are clients that got acquired during the COVID period. That's why we're not talking about it. But we are clearly able to see that the behavior of clients is actually stabilizing from first year onwards. So to answer your large [indiscernible], the behavior of revenue is actually very stable and very encouraging. That's the second part.
For the third part of the question, where you asked about the activation side of things, I think at an overall level, since we are going to Tier 3 and Tier 4 cities, and our activation actually has got very, very robust. What you see from an industry point of view is, overall industry is kind of operating in a very subdued economy environment. So the macroenvironment actually got very soft actually. And that is what is affecting everyone, not only us. But in that period, what you can clearly see is that, we are kind of overperforming at least compared to our peers. So our over -- these clients acquired in Tier 2, Tier 3, cities are actually activating, and what I had also highlighted. So actually, from an internal point of view, there is a macro picture of India, where things are little subdued. But internally and from a competition point of view, we are very, very strongly performing, as our market share in the industry actually is going up, which is by the NSE activity reaching almost 12% by the end of this quarter.
So all these 3, we combined together we hopefully addressed your question. how we are going about it.
So Devender, if you can talk about -- so of the 100 customers which you acquired, say, in FY '22, and you accelerated the 40 customers out of those 100 customers. So of those 40 customers, how many customers are still trading or I mean, if you can share out of those 40 customers, how many customers have dropped off? And maybe what's the average customer lifetime for Angel's customers? Is it more than 6 months because what we understand is that for a highly active customer, trading in options, the lifetime is not more than 6 months to 9 months?
No, no, no. That's a conclusion. But you're giving your hypothesis, right? So we'll tell you where what our data is telling us. We can't comment on your hypothesis. Okay. See, it's very simple, that we today keep 50% of our customers. Our activation rate at one point in time, 2 years back was around 20% to 25%. It has dramatically gone up to 45%, and off late it has even started hitting 50%. If you look at below the [indiscernible].
If you take a 1-year activation, our numbers are even higher than that. Okay. So basically, what has happened is, your first question on how many of these -- how many of those activated customers stay on in the next year? The answer is close to 80% of them do stay, because that's the only when we are seeing the second year revenue to be almost the same as the first year revenue, a guy who is contributing INR 100 share today, is continuing again to contribute INR 100 in the next year. In fact, we even see that somebody who has now matured 3 years into the system because our iTrade plan is currently -- it's entering its fourth year, I believe, fourth or fifth year, right? We have this data now that shows us that even third year there [indiscernible].
So overall, the ratio has not shifted. In fact, it has gotten better. Now in terms of whether the trading propensity changes within 90 days or 180 days, that is not something we comment on at that macro level. Because, that's a -- as you can understand, there are a lot of sensitivities around that data, which we use internally. But we can tell you this much that overall, the activation ratio and engagement ratios have not [ grown ] cohort by cohort.
So if I have understood this correctly, 80% of your active customers in a particular year or continue in the second year of the trading [ period ]?
Correct.
Yes. Right -- got it. And maybe one, if I can ask one last question, and maybe this is [ frayed ] more towards Mr. Dinesh Thakkar, given that he has been in the industry for 20, 25 years. So how do you anticipate -- what is your sense on the trading charges going up from here on from INR 20 to maybe INR 30 or INR 40? Do you anticipate increase in the trading charges in the next 1 or 2 years?
So let me take that question, as [indiscernible], okay. First of all, we believe that as far as trading prices are concerned, going down is basically ruled out. Anything going down historically, share price taking it down, it has not moved the needle. So there is not much ROI on that. Now in terms of raising, I believe at this point, there is no compelling business reason, that our team seems to believe it. Now it's a decision we will continue to evaluate from time to time. But as far as you've seen, as far as all the macros that is considered in the market, I don't see any reason to rate that.
I would like Prateek Mehta, who's our Chief Business Officer, to give his perspective on how we see order costs changing in the future. Any thoughts you can share Prateek?
So the point I am -- so, I would agree to what Narayan said, that eventually our reaction on what is the right commission level for consumers, will rest on what makes sense, and we'll have to continue to evaluate that, depending on various factors in the market, what consumers are getting, what is the competitive scenario, et cetera. Having said that, what is happening right now is also that a bunch of players who -- growth was turbocharged, because of all the -- or the premium investments that came into the space. We see that they might have -- their payments might be under pressure, and they might be under pressure to those rates.
So we'll -- as I said and as Narayan has also said, we continue to watch this and evaluate, if we need to respond to that in a [ form or ] fashion. But right now, as far as the consumers are concerned, we would want to have them the best experience on the product, and as well as -- commercially as well.
And what is the bidding capacity for the derivative rates from current levels given the kind of explosive growth you are seeing without incurring any additional CapEx?
Sorry, I didn't quite catch that question. The question is, what's the -- can you repeat again?
Capacity for Angel to handle derivative trades in a single day, given that the orders are going up significantly.
Yes. Got it, got it, got it. So good thing is that, we have been provisioned for peak. And we have -- I believe you're asking this in light of our scaling traffic here. So basically see, we have been provisioned for peak and I think that I don't anticipate much in terms of any rise in CapEx, especially as far as [Audio Gap] while at some point, you'll have to start looking at building out newer data centers and such, to scale our business even more. And there could be -- and that's something we have not yet looked at, right? I mean that is something we'll continue to plan as we go forward.
That means you're seeing -- so currently, we are seeing close to about 4 million orders in a day, which are being done through our system. So what kind of capacity is built on? How many trades can be handled on the current system from this 4 million?
I have -- Jyoti, can you just give a quick flavor on this?
Sure, Narayan. So essentially, our systems are horizontally scalable, right? So if you get more orders, we just have to deploy another building block, which will serve the new set of the order. So as long as we can deploy hardware, periodically, we can go to any levels of scale. And this is what we've been doing for the last few quarters. Like every time we hit new highs, we just deploy a new building block to serve the [ good ].
The next question is from the line of Jignesh Kamani from GMO.
Just reiterating on the cohort, so if you take about our daily order per day, which declined by around 23 percentage Y-o-Y and ARPU will decline by 20%. So its impact is mainly because of 0 to 2-year old client, right, for more than 2 years old and more than 3-year old clients, both ARPU and daily order per day has not declined, right?
Correct. That is correct Jignesh.
Understood. And secondly on the tech investments, our fixed assets has increased by 42% Y-o-Y. So how much tech investment you capitalized in the third quarter and the full year, 9 months?
Yes. This is a question for Vineet. Vineet, do you have data handy? How much have capitalized, do you have it handy? One second?
In quarter 3, we capitalized about INR 25 crores of capital work in progress. And for the entire 9 months, I think it's in the range of INR 70 crores, INR 80 crores.
And how many periods we amortize this tech investment?
So software, we amortized over a 5-year period and hardware we amortize over 5 or 6 years.
The next question is from the line of Prayesh Jain from Motilal Oswal.
Congrats on a great set of numbers. Narayan, just first, could you talk about the customer acquisition strategy now, things have been kind of difficult in the market, especially because of the macro environment? And secondly, I have to understand the competition has also increased for the acquired customers. So a year back, what was your strategy was and what kind of strategies are you implementing now? What changes are you thinking about from a future acquisition perspective?
Brilliant question. So let me -- see we have -- let's give a recap of the past 2 years in a nutshell, okay? In the past 2 years, our strategy has been at a macro level, we try to acquire and breakeven all clients within 6 months. That's been our overall playbook. Now we went with the playbook, our overall macro picture is that we want to keep the company operating at an OPM of 45% of 50%. Going forward, we still want to keep -- we want to stick to the 45% point, 45% to 50% point as far as the overall OPM is concerned.
But at a micro level, we want to -- we are revisiting this whole 6-month play, because what we are seeing today, is that our clients are sticking around in the system a lot longer than we thought. That is -- we are seeing that our second year -- a person that we acquire today, is not just a -- it was not like we acquire and then we drop the off the next year, that's not true. Because guys are staying on the platform. The second year, they are in fact contributing same or even more revenue than they contributed first year.
Third year revenues are starting to rival second year revenues. So which means, my strategy no longer is just looking at a 6-month payback period, we are looking now at a lifetime pay. Now this lifetime pay is something we want to approach while keeping the broader company envelope, which DT has talked about many times in the past, Dinesh Thakkar, about the 45% to 50%. We believe we can accomplish our lifetime play within that 45% to 50% envelope, right? Now -- so that's the first thing, this is changing. What is changing next year is, moving from 6-month look backs to a lifetime [ pay ], #1. #2 is our strategy this year is, we want to penetrate very selectively in certain markets, because what we are realizing is now the markets are -- naturally they are depressed, okay? And likely, that will change once the projects and everything get announced. So what we have realized is, we are no longer a market participant. We are actually the market maker right now.
If you look at our acquisition numbers for almost 8 to 10 months straight, we have been #2 in acquisitions. And if you look at ADTO, we are far ahead than the #1 acquirer. In terms of NSE actives, we have grown faster than almost everybody, and all other major players have degrown, including the #1 player who is privately listed. Now what this means for us, is we want to take a role of a market expander and a market enabler, and we want to start looking at what new cohorts to go after.
So 2 things are changing, just to recap and answer your question. One is the payback, looking more at a lifetime value. This aligns very well with our Super App strategy. And #2 is, we are going to start looking at which cohorts we want to pick and choose, because we know that some cohorts are far more profitable than others. So this is where we stand. Now I can't obviously divulge a lot more detail, because these are highly sensitive data. But hopefully, there gives you a flavor of what the next year is going to look like.
Great, interesting. Also in the slides, your market share in terms of NSE-active clients is 12%, ADTO is 21%. How do you see this panning out? I think we've mentioned in the past that you have to become the largest digital broker. But how do you see this panning out over the say next 2 to 3 years?
A great question. So my internal benchmark is very clear. I want us to get to at least 18% to 20% NSE active number. If we get to 18% to 20%, by far, we will be the dominant player. Naturally, that will translate to an ADTO of around 30% to 35%. I think this is where I want the company to aim for.
Now on our natural trajectory, I believe with the right kind of product interventions, we'll get there, and that's where I think what we have realized is, unlike -- we have never thankfully changed our playbook. Even when people were burning capital and VC money, we stayed the course. So we -- whatever steps we take, is always going to be with that broader perspective in mind. But overall, I think the ADTO and -- you're spot on is that the 2 metrics we look at, ADTO and NSE active, both of them are a typical function of how our business performs.
Sir, in this journey, what are the regulatory challenges that you anticipate and how do you plan to overcome them?
So I'll have Bhavin give you more color on this in just a few minutes. But see, basically, what has happened is, I want to give a huge shout out and round of applause also to the regulators. Because what they have done is by introducing those changes, they have actually created a fair playing field, and have created a safe ecosystem for all participants. So we have always told, we have a vision for having 10 crore customers on our platform. Now the only way it's going to go to 10 crores, is if the customers feel safe. Today, they don't feel safe, right, there's still loose ends to tie, which the regulators are coming wonderfully on. So I believe the regulatory environment is going to get tighter. Maybe opportunity to earn free money is going to go out. So we have to get smarter. I mean, whether it is ASBA, whatever it is, there might be more regulatory change.
I'll have Bhavin give you an overview of some of the bigger things that are happening this year, and then that will give a sense of how the business is shaping. Bhavin?
Yes, Narayan. Mr. Jain, basically, we have always remained positive about all the regulatory changes, because they aim at investor safety and investor protection. The meta that regulators drive is, how safe are the investors and then -- we act like a custodian for their wealth or their assets, and that is where that safety measures have to come in. We have always remained positive. So in a nutshell, see there would be lot of things that the regulators would be working. So I don't want to preempt in terms of what actions are going to come in over a short-term or a long-term aspect. But whatever has come, has made market more safer and better for investors to trade in this particular market.
So we have always taken this in a very positive spirit, and it always gives us an opportunity to grow within this framework. So I will leave it at that, because there are some speculations, there would be a lot of white papers that SEBI would be working and stuff like that. But as and when it comes, we'll have a better insight about answering those questions.
Yes. Last question from my side, just a clarification, with NS which will be direct, but you will still earn brokerage on every transaction, right?
No direct -- No, it's a proper direct offering. I don't think we -- there's no plan to change any extra brokerage for that. Prateek, am I [ misstating ] this? Prateek, you are muted. Sorry, you are muted. Just hold on.
So we have -- on the consumer side, it will end up being a regular demat [ profit ] and as Narayan pointed out, that's not a place where we are coming to charge brokerage. Having said that, in our partner channel and we'll possibly continue to watch this, because SEBI has also come out with the transaction only platform play, and we'll see if at some point in time, there's an opportunity and the customer rationale to do it. But for now, it will be another convenience on the platform, as far as the consumers are concerned.
So just to clarify this, there will be no revenue that you'll earn from mutual funds -- subscription by your customers on the platform, right?
Yes, that's -- sorry Prateek, go ahead.
[indiscernible].
[Operator Instructions] The next question is from the line of Gautam Chand Jain from GCJ Financial Advisors.
Congratulations for a very good set of numbers. I was looking into the fee and commission income, that for the quarter which sits at [ INR 99 crores ], out of which INR 510 crores is the broking income. So what constitutes other than the broking income, the [ INR 99 crores ]?
Yes, Vineet can you just share the breakdown?
INR 510 crores is brokerage and about INR 8 crores is distribution income. The other operating income of INR 63 crores constitutes the turnover charges -- and turnover charges is the primary source of the other operating income.
Okay. And the DP charges is included in INR 63 crores?
No. DP charges is separate.
Okay. But that is part of INR 609 crores?
Yes. Yes. That's about INR 27 crores DP charges.
But that is not part of broking income, right?
Broking, INR 510 crores.
Okay. And we see the commission payable to the partners, is declining quarter-after-quarter. That is primarily due to your fixed fee plan income which is growing more? Is that the correct way to look at?
Yes. As I also mentioned in the earlier part of my speech, that the proportion of the fixed fee income, the number of clients and the proportion is increasing and that's the reason why, overall, we are seeing a decline in the fees and commission payout.
Okay. And just to clarify out of INR 510 crores...
Mr. Jain, may we request you to please rejoin the queue. We have participants waiting for their turn.
Okay. No problem. I will rejoin the queue.
The next question is from the line of Nidhesh from Investec.
2 questions. Firstly, the way our revenue model is designed. It doesn't grow over a period of time, even if the customer wealth increases, let's say, 5 years out. The ARPU from the customer at best will be flattish on a form of 4, 5-year vintage basis. So do you see any possibility of a revenue model, which grows with customer wealth over a period of time? So that is first question. Second question is, if you look at our admin and other expenses, that has actually -- if we exclude the one-off of last quarter, that has actually grown quarter-on-quarter. While the new customer acquisition has slowed down quite significantly on a quarter-on-quarter basis, I understand that this expense line item is linked to customer acquisition costs. So why this number has not declined? These are the 2 questions, sir.
So first of all, we don't give a breakdown of our customer acquisition cost at that level. But I'll still answer the question to whatever ability we can. But let's take your first question. See, the first question is right. We are -- currently if you look at our ARPU, we today are approaching an ARPU of around 400. Now that has 2, 3 layers of cohorts in it. Now in any digital business, you need to have at least one generation of cohort and at least you have to bake them in your system for at least 2 or 3 quarters to know what the long-term impact is going to be.
Now at the current rate of growth, what I do anticipate is that at some point, this will plateau out. In the sense, the ARPU will not -- it's not like it's going to go from [ INR 390 million ] to INR 150 million or something like that. How it went from INR 690 million to say INR 390 million. I don't expect that kind of a drop. What I expect, is that the median will converge. It will converge to a number. The number could be INR 320 million, INR 330 million. Currently, we don't have a -- we have a guess, but we don't have a good approximation of what that will do. We know that it will be in that range. That's one.
Now second thing is, that what we are seeing though is our median acquisition cost and our overall unit economics continue to be very robust. We are still operating the company within the 45% to 50% range. In fact, this year -- this quarter, we are at 54% -- and so that will be -- we could have actually spent more, but we didn't.
So what we see is that the overall unit economics is likely to stay at a macro trend to the 45% point, while I shift the company away from the 6-month payback mindset to a lifetime deal. And this is a very, very, very strategic call, because if we are -- if you look at our journey, we want -- what do we want in the next 5 years? We want revenue diversification. We want people to come in and build a wealth management platform. That has been the vision of the company. For that, we already have the right cohorts, which we're going to measure.
So I want to just -- this is my high-level view on how we are going to play this strategy out. I will just hand over to Prateek. Prateek, will you give them a lens of how you see the business, the [indiscernible] business play out, and how you see our cohorts maturing and things, that would be very helpful. Will you take it, Prateek?
Sorry, my bad. It's a great question, because if you look at new consumer accounts, their life stage and the earnings potential and hence, as outcome of that stage of wealth, that progresses with time. And if you look at our consumers, they already have a very great relationship with the platform, right? They're coming in on a regular basis, they log in, they transact, and if you look at the traditional way of looking at any of the digital businesses, there's a high recency and frequency in terms of how they interact with the platform, and there's the intimate relationship, as far as the conduction money is concerned.
Now in that context, we already know some of the things that our consumers have been asking us for, like we've had some intelligence on the distribution business as well. This is our historical foray in that area. So we would be clearly building out solutions as [ indicated ] right, mutual funds is something that Narayan already hinted about. But we know that there are various other real estates that consumers are talking about, and have been asking us for.
While we will not disclose what is the exact plan on each of those initiatives and how will we roll them out. But we have learnt a lot about what our consumers need and have been asking us for, and we will be building a bunch of solutions across the board, both on the product side and also on the financial services side, so which essentially will feed in then into the -- maximizing the lifetime that you have to convene, which is the larger lens we are now taking on our consumer relationships.
Yes. And just a small follow-up, when we are talking about lifetime -- focus on life time value, does that mean that the customer acquisition costs -- we are willing to increase our customer acquisition costs, because life time value will be a significant multiplier of that? Is that the mindset change you're talking about?
That's absolutely correct. Absolutely correct. Now, of course, how we increase is going to be our secret sauce. But yes, the macro trend is correct. See, we are -- now that we have invested in the Super App. We have built a Super App. We know our customers like the journey. The only way -- our profile customers for, let's say, we were to introduce insurance products, let's say we were to introduce lending products, that person is very different than the broking customers. There is some similarity. But still, that cohort needs its own maturation or own incubation. So we know that there is a business case. So we have to start expanding that reach, while operating within the 45% to 50% point, that's the catch. As long as we can remain in the right envelope, we have [ gold dust].
The next question is from the line of Ankit Babel from Subhkam Ventures.
Yes. My first question is on your ESOP cost. I mean, in the last quarter, you had mentioned that the ESOP cost would be INR 30 crores in the second half of this year. And if you look at the ESOP cost in third quarter, it is already at INR 21 crores. So I mean, that translates to INR 40 crore or INR 45 crore for the second half. So, just wanted to have your comments on that.
Yes. So, Vineet has already commented on the breakdown of the cost. So, I think that is -- in the accounting part, Vineet if you want to add, yes, please go ahead.
So, if you recollect in my previous discussions, I've told that the overall ESOP cost for the year will be about INR 80-odd crores, out of which the incremental for the issuance -- grants that were done in 2022 will be about INR 60-odd crores. And we continue to toe that line. So overall, the total cost for the year would be about INR 80 crore, incremental would be about INR 16-odd crores.
So, what it would be next year, sir? Whatever ESOP cost, which would flow down from the P&L, total ESOP cost for next year?
Next year, it's going to be about INR 50-odd crores for the issuances that have already been done. For the issuance that is going to happen in this year, those costs will depend on how many stock options we issue and what are the breakup cost?
But any approximate amount, sir? Because I mean, it's very volatile on a quarterly and yearly basis. Just for our consumption.
I will not able to give you a number right now because we are still not firm on the quantum of issuance.
Yes. See, one thing I can comment. We can give you the -- just to comment on how we are looking at it. Basically, like every publicly traded company, we have a stock action plan, we have a stock option pool and we have a certain framework around how much of the pool we allocate each year. Okay? So, we will always stick to the legal and the process -- sorry, the legal and the fiscal guidelines, which has been established by our Board of Directors and our Chairman and Board of Directors. So, we'll always stick to that, whatever percentage that is. Now, within that percentage, yes, there is elasticity. Last year, for example, we spent 1 point something percent. This year, we might -- we don't know, we might be spending 2%. We just don't know that. Whatever we spend, it will be within the overall envelope done by the Board with good ESOP plan, number one. And number 2, it will be within the overall profitable envelope that we had talked about.
So overall, if you are wondering if our expense is going to shrink, the answer is no, because as a growing company, we have to continue to expand our talent and our reach. So, I don't see the ESOP costs going down. It's not like Google or Amazon, where they have already invested in all the employees so far ahead of time, but now they can afford to keep it at whatever a few basis points of their overall P&L. A very good case in point is if you look at HDFC, in the first 10 years of their P&L, look at their ESOP costs, right? It's always increasing. So, that's how growth companies operate because you need that premium to get talent on to the team. But just to give you an idea of -- I wanted to just give you the color on how we are thinking about it just so you have a sense of what -- of how we are planning.
I understand it won't come down, but I'm just worried, will it shoot up drastically in the coming years?
See, if it let's say, if it shoots up that proves that we have the right vehicle to justify the return on investment. Ultimately, you have to look at employees as our prime assets. They are the ones that are moving the needle and creating business value. If by investing in 10 bucks if I can get 1,000 bucks of value, then it's a brain dead decision. In absolute terms it means I'm spending more, so be it. We are actually adding more to the bottom line. So, what we do is when we do the plan, we look at overall, we are in the business of maximizing opportunity cost for investors, shareholders and employees. And if we cannot return, if we cannot create that market, if we cannot create that opportunity. And then obviously, there is going to be a correction in our ESOP cost and everything accordingly. But so far, that has not been the case. So, that's really how we look at it. So, the mindset is growth and the mindset is wealth creation for the institutional shareholders, companies and obviously, also for employees.
The next question is from the line of Pruthul Shah from Anubhuti Advisors.
My question is with respect to the advertisement spend for the quarter and 9 months ended December this year. So, what is the expenditure for advertisement expense?
We don't go into that level of -- we don't disclose that level of detail. But I can just have PT to give you a broad flavor and -- so PT, can you just walk him through how we have strategized this year.
Thanks. Thanks, Narayan. So see, we are a very established brand. Last year, when we did rebranding that time we spent enough advertising dollars to ensure that our total awareness, which is 90% kind of [ flavor ]. This year, we have been conservative because one, the market was soft and second, we were waiting for our new app to be fully in place. But in terms of advertising expense, our strategy is to be conservative, more digital spend, less TV, more digital and focus more on organic traffic with the spend, focus more on search volumes across Play Store, YouTube and Google. So, that has been our strategy. So, we have been conservative, but I think once our app is in place post this quarter, starting this quarter to next year, we're going to be more aggressive given that we will be supporting new lines and new businesses also.
And the next question is with respect to the active clients. So currently [Audio Gap] clients is basically 34%. So where do you see this ratio going in medium term or [Audio Gap]?
Very good question. Good question. Good question. So, I think in the medium term, I believe our activation rates will be basically hovering around the same point. Largely, this is for a couple of reasons. One is that there has been no significant decay, either in -- either decay or appreciation in our cohort books. If you look at the quarter, the people that we have acquired, the age profile, the tier in which they are coming from, nothing has changed. Nothing has changed. So, I don't think the number will change dramatically. However, what will change is that we will have new people coming to Angel, which we have never had. We have never had anybody who has come to Angel for anything other than spot booking. But that 100% I'm certain is going to change. Because as you can see, we have always talked about our road map.
See, we are going to launch MX. MS has already launched. And I told you it is going to -- I told you guys, it's going to come next -- in Q1, but we are actually ahead of schedule. So, we already launched it. Next, we are working on a lot of products, insurance is coming up. We have including other exciting products on the lending side, which are -- which we'll talk about when the time is right, right? But we are working on a new -- on multiple new families of products. So, I do expect that with that, the overall activation ratio will actually get a slight bump. But what it is, I can't quantify this yet. We don't have the data.
So basically, you are saying that with the new app, the client acquisition number, because client will slightly inch up. And -- but the booking side, it might not likely to translate into the trading volumes or trading orders per se and that will result into slightly lower in terms of activation ratio? Or how should we look at?
First of all it will go up. It will go up. It cannot come down. So, it will go up, it will only go up.
Because what we are seeing is the industry-wide ratio also declined [Technical Difficulty] 3 years back ratio, right, sub-30% level and we are also tracking that trend, what the industry is facing. So, we are kind of concerned about whether that ratio will slip below 30% any day.
I don't see that ratio slipping below 30%. See, I know that some of our other brokers, large digital brokers have come out and said that. I know what you're referring to. But see, you should look at their acquisition set. Well, our largest broker, the number is lower for him, not for us. For us, the number is black and white. We are probably [Technical Difficulty] every quarter. So, we are not seeing any decline. Now in fact, I would say we are not -- I would go as far as to say that -- and Devender you should add, you should bring your perspective here. I actually think that the super app, the activation can get better because customers come to the app for more reasons than just broking. But let me just defer to Devender here because he has a lot more data that he looks at and he can give you some more perspective. DK, over to you.
We I look at the NSE active clients, I think overall, the industry is trending lower because it's on macro environment. And this trend, I think, is going to subside and lowest in some time. It has not subsided yet. So, the overall industry will continue be growing for some time and long with us -- along with that, our numbers are also going to grow. But as rightly mentioned by Narayan that we see the lower price because our activation programs and our behavior of clients who are new to the cohort is actually increasing over the last quarter period. We are seeing higher activation of clients who are now because with the launch of the new platform and the new ML-based and data science-based program that we have started.
So we are actually able to see that ramp-up happening very, very strongly. So -- and overall, we don't see that these numbers will go very down, definitely not below 30%, maybe around 32%, it might go to. But we definitely see that they still plateau out. And as we launch more services, I think there will be more cross -- acquisition of cross-selling of clients where you will actually sell the right products to the right client, which will actually increase activation in the long run. Just think about it this way that today, we acquire clients in a one pocket and we then try to figure out solutions for them and then go ahead. But when you try to do the same thing in multiple pockets, you will have understanding of doing the right into right product, which will then allow only the right product people to get into the system and actually experience a visit to that level. So, I see that this will plateaued out and this will continue that way.
And also just to add one more thing. You should look at every month, we publish our MSC active numbers. Why don't you do this? Why don't you plot a graph of our activation number, okay? And plot [indiscernible] right next to it. And give us the answer. I don't want to use the competitor's name here, but do that analysis yourself, just do it over the past 12 months, you will see how fast they have decelerated and you'll see how fast we have grown. So you will get your answer right there.
We have done that. So, the #2 guy without naming it has been losing the activation number quite rapidly.
Exactly. So, that's why we are -- that's why I was...
That's the reason why our concern, we are not seeing that in Angel and that's a very positive print, which we are leading right now. But given the macro [Technical Difficulty]
I'm sorry to interrupt you, sir. But your voice is breaking, we are unable to hear you clearly.
I was saying that the market was kind of stabilizing or likely to not generate enough [indiscernible] versus past 2 years, which the market has witnessed. We might see this trend for the temporary [Technical Difficulty] more services you guys are able to bring in the app then that will start to reverse. But before that, it will trend down, that was the concern I had.
See, interestingly, ideally one other way to look at it. Let's assume that the market but I don't believe it is going to be bearish, okay? But let's just say it actually goes into a bear mode, okay? Even then, if we are growing faster in this broking industry than the competition and we are growing, then our business is already in great shape. This is a long-term play for us. We see this as a multi-decade [Technical Difficulty]. So overall, from all lenses, our strategic position then continues to become stronger as we introduce the Super App platform. Of course, there's a lot of room for improvement. We are not saying no to that. But as it stands, we are off to a good start.
The next question is from the line of Sarvesh Gupta from Maximal Capital.
Congratulations on a decent set of numbers. Sir, one, most of my questions have been answered. But one thing which I wanted to understand that given that our business hardly has any working capital requirement or much of -- even if you are adding hardware, but that's also not much compared to our absolute corporate base. So, why can't we increase sustainability -- sustainably the dividend payout rate from the current 35-odd percent, because there's really not much of a need, especially during this time when the growth is also not coming through as strong because of the macro reason? So, that is question number one.
And secondly, you were talking about this active client ratio. And when I was seeing this graph for the last 2 years, you versus the industry, I think our active client ratio versus the industry was at a much higher -- with a much higher gap. So, we were better off compared to the industry at a higher margin. And that has actually come down in the last 10 years -- in the last 2 years. So, what explains that? Because ideally, we would have expected our active client ratio minus the industry active client ratio to be trending upwards, but it has actually, in the last 8 quarter span it has actually trended downwards.
Yes. So actually 2 things. First of all, let me take the I'll just very quickly talk about dividend payout and then get to [Technical Difficulty]. See, during the -- first of all, we're in a growth phase of our company right now, okay? So, our growth phase of the company, our strategy is to continue reinvesting our capital in expanding our business, building our book of business and growing and expanding into new territories and new areas. So, there is not much to add beyond that. Definitely, Vineet Agrawal is on call as well. PT, is there anything you'd like to add this before we jump to the next question.
No, no. So I think what is important is to keep in mind that we have a high [ expression ] and potential seems to be quite huge. So definitely, this kind of like earnings that we have, I think it's not very big enough like to think about a dividend -- increasing dividend at this stage. What we are doing, I think it is perfect. And we have to keep enough capital for whatever growth opportunities we see in the future. And already we have like invested huge amount on Super App and we would like to see that we are able to capitalize, capture good market share in each and every service that we offer. That will require a good amount of capital backing with us.
Thank you, Sarvesh. So, and now your other question on activation see, basically there, right, if you remember last year, there was a huge influx of venture month. And there were huge ETF-related schemes which were going on. And that completely skewed the activation chart. If you look at the #4 player right? They were at an industry all-time high activation ratio because they were giving out free ETFs. And the minute I give out free ETFs or even INR 10, you trade on the platform, that shows up as an MSC active number. Whereas we never did that. We have never done that. We don't do that even now. Okay.
So obviously, at a macro level, yes, you can say that why do these numbers look so different, right? But if you look at the actual MSC active number, there, we have only continued to rise. So, when it comes to people actually trading, we are keeping more traders on our platform than everybody else. And I think that's the more important trend we should -- that we are focused on. Other than that, these numbers whether it's 35% or 40%, it's kind of a moot point if the person doesn't end up staying on the platform and trading, right? So, we have to look at it from that point of view.
And are you thinking of adding more and more to our Super App now? In the past few years, there were so many new entities, which came to the game doing variety of stuff. And now that we see money is not flowing in as strongly as in previous years. So, are you also seeing some inorganic opportunities in the market right now that we can sort of bolt-on to? Or we feel that it is better to organically sort of build-up everything in our own way?
A great question, actually, great question. See, in the past, we had -- we could never even look at it because we -- without having a Super App platform, there is no play to integrate. There's no value creation there for the customer. Whereas now that the platform is built, I think I'd say, as a team, we are strategically going to look at both organic and inorganic options. And you are absolutely correct that with the funding seen drying up, there are some excellent opportunities which will open up and, we are currently open to those ideas if the timing is right.
Congratulations and all the best.
Thank you very much.
The next question is from the line of Deepak Sonawane from Haitong Securities.
Congratulations on a good set of numbers. So, I just have one question regarding our client base. I mean just wanted to understand much more in detail regarding our customer profile. If you see that over the last 8 quarters, we have been adding around 1 million to 1.2 million customers, right, on a quarterly basis. Can you just give us color and more color based on about -- I mean among these 1.2 million customers, how many customers -- I mean, how many percentage of customers are not trading at all with us? I mean -- and even after a particular period of time, we have been -- I mean we give up in terms of nudging these customers to get active.
So, yes. Got it. Got it. Okay. So usually, we don't give this level of data, but at least I'll try to answer -- I'll try to answer a part of that question. So, your question really is what is the dormancy metrics going to look like? How does it evolve? Because we are paying upfront cost. See, the issue is that, I've already paid the KYC cost for acquiring all these customers, which meant that 50% are becoming active. The remainder of the 50%, what are we doing about it? Because it's sunk money. Now, that's the marketing that the Holy Grail of marketing, if you can optimize and fine tune your CAC to that level. So first of all, even with 50% activation, which is obviously, it's a phenomenally high number, we are performing extremely well. Even if that number goes down by another 5%, we'll still be performing very well. So, I'm not too worried about that metric, right?
But your other question is very insightful. See, we have -- over the last year, we have -- we are one of the few companies today who have built an machine learning-based dormancy model, okay. And just this quarter, actually, we hit an all-time high in terms of how many dormant clients became reactive. So, I look at this as an emerging area for Angel, because with very large customer base, a large part of our customer base is already within our system. They already have the KYC, they have just gone dormant. If you rekindle them back, your -- obviously, your time-to-market, your brand efficiency, all of that goes up dramatically. So, this is a strategic initiative, which has been -- which we have been working on for the last year and we have started seeing some phenomenal results in that. But the results are still too early to call out at this point. But we are -- to give you an idea, we are -- it's a heavy data science influence play and we have actively started looking at this. And we, in fact, we track it at the CEO level. That is at my level. So, that gives you an idea of how important that is.
[Technical Difficulty] As the line has been placed on the hold, we'll move to the next question, which is from the line of [ Subash Goyal ] from Motilal Oswal.
Yes, I wanted to ask that the company is giving a dividend, right?
Yes. Sorry?
The company must be giving out dividend, right?
Yes, yes. Vineet had already announced that. Yes.
Okay. So, my doubt regarding that was that if the company is also spending money on technology, then how and why is it giving dividend? Like why not invest more money into technology?
See, basically, when we set the -- it's a great question. When we did the plan and when we look at the overall fiscal outlook of the company, right, we see that for the kind of growth we want and for the kind of scale we want, we can operate well within the financial envelope of the 45% [ OPM ]. And in some quarters, as you saw, like this quarter, our OPM is 60%. We don't ever want to be at that number. We actually want to be between 45%, 47% if you ask me. But many times, what happens is because our operational efficiency, that is still much higher than we think, we believe it's very wise to return that money as dividend back to our shareholders. Because very simply put we -- our capital needs were completely addressed. We don't need any more cash than this as of this point. And if needed, we always have other ways and we can deal with [Technical Difficulty].
The next question is from the line of Anant from Electrum Portfolio.
My first question is basically what is the update on the incorporation of the AMC? And the second thing is what is the outlook on your distribution business side?
Yes. So, in corporation on AMC, I think the paper work is on. We likely expect it to complete within the next quarter or so. Now that said, just because it's strong doesn't mean we are going to spring into action, right? It's going to take us some time to figure out how we actually go and actuate a plan to operationalize it. That's a longer topic, which we currently have not -- we are currently working on the right models there. Your second question is more relevant is distribution. Our entire future play is built on the distribution platform. This is where we are hedging our -- not hedging, this is where we are -- hedging is the right work actually. We are actually hedging on this for the long term because I anticipate that our profile, our customer base is so strong that there is huge opportunity to up-sell and build even more stickiness than introducing new products.
Prateek, do you want to just give us a sense of how you're thinking about the expect elements of all these services?
Your thinking is right, is that if you look at the consumer and with typical -- we are currently in the broking space and something which is larger than broking is the entire trading space. And then, of course, there is an earnings space and there is spending space, right? So, if you look at the consumer, literally 100% of the consumers are earning and they're spending, right? Some of them are saving and some of them are investing and then eventually, some of them are reacting and broking, right? What we want -- what we have realized is that our consumers and especially as the years have rolled by, our consumer profile is continuing -- a large number of consumers are still very young. So, what is going to happen over the next few years is that their requirement for financial services across all of these states is just going to go up. And hence, we will solve for whatever problems they might have across these areas.
Now, to what Narayan has already alluded to, which is there would be some interest in lending positions that will come by the insurance and then there are -- depending on what is the right experience and what is the right product cost for consumers we keep doing more on the distribution side. Clearly, mutual fund insurance and some of the other fixed income products will be part of the play, which we are already [indiscernible] distributing in the past, but that is something that we'll expand on the product and then there completely new solution that we will build over the course of the coming year and beyond.
Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Narayan Gangadhar for closing comments.
Yes. So thank you, everyone, for joining us today on the earnings call. As we have discussed, we are extremely excited and really super pumped about the launch of our Android app. This app is going to be the cornerstone of all our future requirements and we are betting big on how we can introduce newer and newer products to the market on top of this platform. So, we continue to invest and open up the market. We are going to take a pool position in expanding the market going forward.
We want to continue our penetration in Tier 2, Tier 3 and even to Tier 4 and 5 cities and bring these customers live on our platform and expose them to this wide range of products that we are about to build. So, we'll also continue to invest in up-leveling our clients through better education and better refinement of our digital infrastructure. So, I want to thank all of you for your continued support and confidence in Angel One. For any further queries, please do reach out Hitul, our Head of IR or SGA, our Investment Relation Advisors.
I wish all of you a great day ahead. Stay safe and stay strong. Thank you very much.
Thank you. On behalf of Angel One Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.