Why has the stock of Angel One fallen so sharply in the last few days of trading?

The stock of Angel One (formerly Angel Broking) has slipped sharply by nearly 21% in 2 days with about 15% cut coming in just on Friday. There have been concerns about the sustenance of financial performance by Angel One despite its strong growth in client numbers and volumes. There has been a fear that it has been spreading itself too thin for getting more clients and business at the cost of profitability.

The latest trigger for the fall was after the promoter Rahul Thakkar was heavily selling shares in the market. In a recent disclosure, it was revealed that the promoter Rahul Thakkar sold 41,200 equity shares of the company via open market sale. However, what really disappointed people was that his stake had fallen to just 2.6% in Angel one. The stock of Angel has fallen from a high of Rs.2,022 to about Rs.1,350 in just a span of few days.

However, Angel One has been doing well on other parameters. For instance, its client base rose by 4.6% to 96.40 lakhs in April, bringing it close to the 1 crore client mark. Angel had average daily turnover (ADTO of Rs.9.5 trillion which has almost doubled over the last one year on the back of a massive client surge. However, margins are increasingly a concern as over 97% of its revenues comes from purely the low margin F&O business.