Angel One Vs Motilal Oswal The number of retail investors in India has boomed in recent years with the onset of the pandemic. It brought a new set of small and big traders and investors to learn and implement their skills in their free time. This benefited multiple companies that earn from activities in the financial markets.

Angel Broking and Motilal Oswal are two of the leading brokers in India. Both of them have millions of clients and offer financial services. Read this article as we compare the two companies.

Angel One Vs Motilal Oswal – Company Overview

Angel One

Angel One Limited, a prominent fintech platform, has successfully empowered aspiring young Indians to build wealth since its inception in 1996. Originally established as a traditional stock brokerage firm, the company embarked on its “Digital Journey” in 2019, revolutionizing its services.

Today, Angel One Limited offers a comprehensive digital investment solution, encompassing stock, currency, and commodity broking, margin trading, depository services, and mutual fund distribution. With a commitment to providing end-to-end digital financial solutions, the company has also ventured into portfolio management services.

Notably, Angel One Limited has achieved the remarkable status of being the third-largest stock broker in India based on NSE active clients. The company’s impressive reach is evident with over 39 million app downloads, reflecting a strong user base of 13.8 million clients. Through its innovative approach and digital prowess, Angel One Limited continues to play a pivotal role in shaping the financial landscape for millions of Indians.

Motilal Oswal

Established in 1987 as a modest sub-broking unit with just two promoters and a peon, Motilal Oswal Financial Services (MOFSL) has evolved into a strong and well-diversified financial services company. MOFSL is unwaveringly committed to enabling wealth creation through knowledge.

The company has an extensive footprint, reaching over 550 cities through a network of more than 2,500 business locations. With a dedicated team exceeding 9,800 employees, MOFSL offers a comprehensive range of financial products and services spanning retail and institutional broking, private wealth, investment banking, private equity, asset management, and home finance.

Recognized as one of the top 4 broking houses in terms of gross brokerage revenue, MOFSL has solidified its position in the financial industry. Notably, the company’s Total Asset & Wealth Management Assets Under Management (AUM) recently surpassed the ₹1 trillion mark, a testament to its success and significance in the financial services sector.

Segment Analysis

Angel One: Angel One is a diversified financial services company with broking and depository operations, equity trading and support services, client funding, third-party distribution, mutual funds, insurance, IPOs, and bonds.

Motilal Oswal: Motilal Oswal Financial Services Limited (MOFSL) is a diversified financial services company with stock broking business activity. MOFSL operates in businesses such as retail broking and distribution, institutional broking, investment banking, asset management, wealth management, alternative assets, housing finance, and loan-against securities.

Industry Overview

India continues to remain a bright spot in the global economic landscape. It leverages its demographic dividend, digital transformation, and innovation potential to drive sustained growth. According to the economic survey, real GDP growth is forecasted to reach 6.5% in FY24, though lower than in FY23, India will still be one of the fastest-growing economies in the world. This will be primarily driven by a progressive regulatory environment, a strong industrial policy (through PLI), a deleveraged private sector, and sustained capital expenditure, especially on large-scale infrastructure projects.

The Indian equity market has seen a paradigm shift, with retail investors substantially increasing their participation in equity markets. Their share in both cash and equity derivatives has grown over time. The share of retail investors expanded to 36.5% in equity cash turnover in FY23 from 33.0% in FY16. Also, their share in the equity derivative turnover segment expanded to 27.7% in FY23 from 23.0% in FY16. This trend reflects that retail investors have a good portfolio mix. Retail investors are gradually building a portfolio for the long term. 

Angel One Vs Motilal Oswal – Financials

Revenue & Net Profit

Angle One reported revenue of Rs. 3201 crore in FY23 against Rs. 2297 crore in FY22, indicating an increase of 39%. Its profitability has increased to Rs. 890 crore in FY23 from Rs. 625 crore, indicating an increase of 42%. Revenue and profits increased significantly as their total client base expanded by 49.5% year over year, and overall average daily turnover (ADTO) increased to Rs 13.6 trillion in FY23, 110.4% higher than in FY22.

Motilal Oswal reported revenue of Rs. 4197 crore in FY23 against Rs. 4316 crore in FY22, indicating a decrease of 2.75%. Its profitability has decreased to Rs. 935 crore in FY23 from Rs. 1312 crore, indicating a decrease of 29%. On a longer perspective, revenues and profits have increased.

On a 4-year CAGR basis, Angel One has grown at a higher growth rate compared to Motilal Oswal in terms of revenue and profit. The figures below compare the revenue & profits of Angel One vs Motilal Oswal over the last five fiscal years.

Profit Margins

The operating margins of Angel One and Motilal Oswal stand at around 42.68% and 44%, respectively, with Motilal slightly leading. However, on a 5-year average basis, Motilal has a higher OPM.

The net profit margins of Angel One and Motilal Oswal stand at around 29.64% and 22.33%, respectively, with Angel One being ahead. However, looking at the 5-year average, we find the margins are almost equal.

The margins for Angel One have increased consistently over the years, while for Motilal Oswal, the margins have been fluctuating due to cyclical fluctuations in business volumes. The figures below compare the profit margins of Angel One vs Motilal Oswal over the last five fiscal years.

Return Ratios

Angel One reported a return on equity of 41.17%, higher than its 5-year average of 27.16%. Motilal Oswal reported a return on equity of 14.90%, compared to its 5-year average of 16.33%.

Considering the return on capital employed, Angel One, and Motilal Oswal reported 56.72% and 13.32%, respectively. Angel One returns are higher than its 5-year average of 42.31%, while Motilal Oswal couldn’t beat its 5-year average of 16.16%.

Angel One ratios have consistently improved over the years and are generating significant returns, while Motilal Oswal ratios have been inconsistent due to fluctuations in volumes.

The figures below compare the return on equity & return on capital employed by Angel One vs Motilal Oswal over the last five fiscals.

Leverage Ratios

The debt-to-equity ratio of both companies during the last 5 years indicates a positive signal. Both companies didn’t need to rely more on borrowed capital. The 5-year average debt to equity of Angel One and Motilal Oswal stands at 0.93 & 1.43, respectively, which means they can retain more of their revenue as they do not have a huge obligation towards the repayment of debt and interest.

Regarding interest coverage ratio, Angel One leads with an ICR of 14.65, while Motilal Oswal’s figure comes up to 3.18x. ICR above 1.5x is an acceptable ratio, according to which both companies are considered safe.

The figures below compare the debt-equity ratio and ICR of Angel One vs Motilal Oswal over the last five fiscal years.

Key Metrics of Angel One Vs Motilal Oswal

Angel One Vs Motilal Oswal – Future Plans

Angel One

• It has plans to incorporate the latest technological tools and develop strong AI and data science capabilities.
• It aims to achieve market leadership.

Motilal Oswal

• It will further diversify its business model towards more annuity sources of earnings.
• It aims to become paperless in disbursal documentation
• It aims to push more performance-linked AUM in both PMS and AIF, as it would help push net yields. 

Conclusion

As we conclude the article on the comparison between Angel One and Motilal Oswal, we have understood their business, financials, and future outlook. Both are major players in the financial sector. Further analysis is required to understand the risk & return characteristics and suitability before investing. Please leave your thoughts in the section below.

Written by Ashish Agarwal

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