Angel One Limited analyst Q&A

The first question comes from the line of Swarnabha Mukherjee with B&K Securities.

Three questions from my side. So first of all, sir, just wanted to understand in terms of the current trend that we are seeing in the orders run rate, the daily average orders that we have. So June was lower than May. And if I think the number of contracts that are trading in exchanges would be the indicator, I think it continues to remain slightly tepid. So just wanted to understand that whether your timelines that you had earlier kind of envisaged that you will be able to recoup the number of orders back to the earlier levels considering the current trends, is there any extension in the timelines? What would be your thoughts regarding that? And similarly, on the client acquisition and activation rate, what would be your thoughts in the current scenario? Particularly last quarter in the presentation, you had, I think, disclosed that the payback period post acquisition is at around 10 months for FY25. So has it changed? Has it improved or has it gotten extended? I would like to hear your thoughts on that. So that's on the broking part. Also in terms of the new businesses, so I think from the mix point of view, it is now at around 3%. So I just wanted to have some colour from you that where do you see this in a couple of years, where can the contribution go and also, when do we expect to see the cost absorption playing out? Because I think compared to last quarter, the impact of the new business incubations on the margin has increased slightly. So just your thoughts on that would be very helpful. And lastly, one question on the cash broking realization, I see that the realization per order has increased on a Q-o-Q basis. So anything to read into that? Is it more because of, say, higher MTF being done and the ticket sizes are larger? Any view would be very helpful. That's it from my side.

So in terms of current trend on order and revenue, you can see in this quarter, already we have seen growth of around -- in terms of revenue around 7% to 8%. So what we saw that, okay, if you see that FIIs were absent for like last year third quarter and fourth quarter and this first quarter, for first 2 months, they were positive and they had a positive inflow. And we can clearly see an impact of like momentum in the market and FIIs has strong correlation between retail activity and their orders. So we believe as this macro will improve and FIIs and retail will come back, we will see some kind of like good earning momentum and all that, we are very hopeful that we will be able to exit quarter 4 with a decent visibility on OPM that we were speaking about. So we are confident that our OPM is going to return back to normal by exit of quarter 4, looking at the trend of customer acquisition and looking at activity of customers, which is increasing on our platform. On client acquisition trend, again, payback period depends on market conditions and engagement of retail in that particular 6, 8 months and all that. But we are confident, we focus more on cost to revenue. If at all, revenue justifies cost and we are able to see that, okay, that will result in OPM 40-45%. We would not like to leave any growth on the table. And on new businesses, Vineet, if you can take that on new businesses contribution and impact of this thing on our margins and all that.

Sure. So Swarnabha, as we have been maintaining in the past that the new businesses will take some time to breakeven, we expect the wealth business to break even faster than the AMC business, which is a long gestation period business, given that we are into passives. And we have always guided that the margin impact of these new businesses in the short term till they become profitable will be around 2%. It could vary between 2-2.5% depending on how the quarter's performance goes. So I mean, there is no major change in what we have already been communicating.

And on fourth point, cash broking, yes, it would be impact of because margin trading book is really picking up. So people who invest through margin trading, their ticket size is a bit higher. So realization per order would be higher.

Right, sir. Very helpful. Just a follow-up on the last point. We are seeing that this -- on the margin trading side, I think the competitive intensity has also increased over the last few months. So from the profit pool point of view, is there any further risk on the lending and basically the rate that we offer to the customer for borrowing or I mean any competitive pressures you see there?

Currently, we don't see any competitive pressure because what we -- see, we have been doing margin trading since ages. So this margin trading fund book depends on market momentum and volatility. If at all, we are hopeful about movement would be positive, earning growth FIIs inflows will come again, I don't see any pressure. In fact, that will be tailwinds. Right now, I don't see any competition in terms of margin funding, in terms of retail that we are getting and plus people who are opting for margin trading. Currently, as I am speaking, I don't see any competitive pressure in that segment.

The next question comes from the line of Prayesh Jain with Motilal Oswal Financial Services Limited.

Just a couple of questions. Firstly, on the businesses of wealth, AMC and mutual fund, what would be the revenue of each of these businesses today? And are they kind of sitting in the distribution part of the reporting, every part is -- every of these except -- so where are they sitting in the P&L? And secondly, on the tax rate, again, it was on the higher side in this quarter. How do you see the tax rate going ahead? And lastly, on the cash segment realizations, should this sustain at current levels given -- and do you think the margin trade funding book will continue to grow?

Okay. Vineet, can you take this question?

Yes. So Prayesh, on the split of the revenue, it is the distribution part of the business, which is about 3% of the total revenue. That is primarily driven by the distribution of insurance and credit products and IPO. For the other businesses, the asset management and the wealth management, they are spread across commissions and interest income because some part of the revenue that we get from the wealth business is the capital that we have put in treasury operations, etc. So it's spread there. Primarily, it's the distribution part of the business, which is 3% for credit, insurance and IPOs. On the -- yes, on the tax rate, yes, the effective tax rate for this quarter is higher. And this is primarily because a couple of our businesses are loss-making, and therefore, the effective tax rate has gone up by about 3% because of those businesses. And the CSR contribution that we do quarter-on-quarter, that doesn't qualify for any tax deduction. So that's also about a 1% impact of the CSR contribution. So the effective tax rate for this quarter is about 30%.

And on this cash segment realization, if Arief and Nishant can comment. But broadly, what we have seen is that it depends on the market condition. And if at all like we are able to maintain and increase this book size, realization would not change much. But still, I would like Arief and Nishant to comment on this.

Yes. Good morning, everyone. Arief here, right? So the cash segment has been very strong for us. Our market share has been growing. MTF, we are confident that the book will keep growing at a healthy pace. We are also working on figuring out a more smoother experience in MTF. So that should not be a concern in the short to midterm, we should be good on our Cash segment.

This is Nishant Jain this side. And I would like to echo what Arief just mentioned. We are seeing a secular growth in the last 3 odd quarters and pretty much expect the momentum to continue. There are a host of initiatives that we are bringing about as far as the in-app experience is concerned, also trying to augment our advisory around MTF stocks in particular. And therefore, with the interventions, which are basically built around client experience and trying to augment the understanding there, we believe that the momentum should continue and should not be contingent on any kind of interest rate fluctuations.

Just a follow-up on the first question. What would be the quantum of wealth management revenues, AMC revenues? Wealth management, in particular, we have about ₹5,000 crores kind of an AUM. How much of the -- what would be the revenue size of this segment and even for the AMC?

On that, Shobhit, if you can this? Vineet, will you take this or should we give it to Shobhit?

Yes. I'll just add more on a qualitative basis. So largely, wealth management AUM is a trail- bearing kind of a business and the revenue is back-ended in nature. So to that extent, you will see the AUM growth happen and then the revenue follows for that. But on specific details, I'll let Vineet take that.

I think as we mentioned that let these businesses grow and then we'll start disclosing more detailed information about these businesses. Today, as we said, these businesses are in the incubation stage, and we will leave it at that.

Next question comes from the line of Vikram Raghavan with Moon Capital.

My questions have been answered. Thank you.

Next question comes from the line of Nidhesh Jain with Investec.

First question is on economics of the new customer that we are acquiring in terms of CAC. Last quarter, you mentioned that the customer acquisition cost has increased. How are the trends in this quarter? And any comment on LTV to CAC for these new customers? Second is, if you can share what is the approximate retention on wealth AUM? And what is the share of fee-earning AUM in mutual fund distribution? And the third question is on ESOP, how much ESOP expense we should budget on a quarterly basis going forward? These are the 3 questions.

On cost of acquisition, it remains same as what it was last quarter. It does not change significantly or even like marginally also, small fluctuation here and there is there. But overall, we are seeing trend in terms of customer acquisition also, we are able to maintain this trajectory and market share of around 21% on a new acquisition that we do. So that way, that side, it is very much in control. Your second question was can you just elaborate on that AUM...

Any comment on LTV to CAC? Earlier, we have disclosed 8x. And then I think recently, we've been talking about around 6x LTV to CAC.

Yes. So we would like to refresh that LTV to CAC maybe once we see this cycle completely panning out. But just this quarter, we saw impact of F&O. As I said, it takes time for customer to really bounce back and search, which instruments they would like to participate. So too early to really refresh that chart. I would say let us wait for 1 or 2 quarters, let retail again get active the way they are active in the market. And then it will be a better time to refresh that chart.

Sure. Sir, next question is on retention on wealth AUM. What is the yield or retention that we earn on wealth AUM roughly? And what is the share of fee earning AUM within mutual fund distribution?

Vineet, do we disclose anything about this?

No. Right now, we are not giving those granular details. So yes, so we are almost in line with the market, but we'll come out with more details as these businesses scale up.

And on ESOP budget?

Yes. On the ESOP cost, as I mentioned in my opening statement that the estimated total cost of the stock grants for this year and the previous year’s put together is about ₹2.1 billion, ₹210 crores, of which we've spent about ₹45 crores in this quarter. So it will be in the range of about ₹55-odd crores for the next 3 quarters.

Next question comes from the line of Pradyumna Choudhary with JM Financial Family Office.

First question is on the F&O market share. So the broader understanding was post March, post the last phase of regulations, we'll again start seeing the gains in line with increase in retail activity month-on-month. So that really hasn't happened, right? Like there were some market share gains in the month of May. And then again, June was a lower month -- subdued month for us. So how do we -- I know it's just 1 month, but like how do we really see this going forward?

Market share gain takes time to really like right now if you see retail activity in F&O, is less to maintain. Market share is also likely something that we are working on. And if you look at this whole segment, there are lots of prop desks who come as an individual. So their kind of like volume has not decreased. But for us, to maintain retail market share and that, I think, is a big achievement. And I don't think we have lost any market share anywhere across any equity segment or even commodity. Arief, you would like to comment on this?

Yes. Thanks, DT. So as I mentioned, right, our market share in equity and MTF has been going up sequentially and quite strongly. On the F&O, it's a bit of a month story that you're talking about, but we are fairly confident that we will recover back. I don't think we have lost any market share per se. But there's a little bit of up and down of a few bps month-to-month, but that's okay.

Just to add, see F&O, retail growth and all that has remained robust so if you look at this options, you will see that trajectory is quite strong.

Mr. Choudhary, are you done with the questions?

Sir, just a follow-up. So how do we see this F&O market share evolving for us over the coming months? Are we expecting to make gains? Are we expecting to just maintain? And in case we are looking at gaining share, then what would be the drivers for this?

What we are seeing is that because we are acquiring more customers, so market share improvement will be gradual. But what we are seeing is that this whole pie of like volume on F&O side is going to expand. That is going to help in terms of us gaining that normalized OPM by the end of quarter 4.

Understood. And anything you've heard from SEBI in recent times, there's been news articles on fortnightly index expiries and all those things. So anything we are hearing from SEBI in addition to whatever is been in the news?

No, we haven't heard anything like that, news which is going to come. There are articles published in media and all that. But overall, no communication or any changes on F&O segment.

Next question comes from the line of Abhijeet Sakhare with Kotak Securities.

Sir, my first question refers to the exit quarter operating margins that you are guiding towards. It would be useful if you could also sort of give us what this would imply in terms of the order run rate or, let's say, the MTF book or the broad cost ratios as we get into the fourth quarter? Because as of now, if I just look at what we've done in the last fourth quarter as a base of the expense line, it seems like the ask rate on the top line seems to be slightly stiff. So just trying to kind of get better clarity into the input variables into the operating margin assumptions there.

Okay. So first of all, like expenses in this quarter is all about increment appraisals which happens plus there is an IPL cost. So if you look at top line, that is growing at the rate of 8%. If it continue growing top line at the rate of 8% and keep cost kind of under control, so what you will see is that exit is 40 plus OPM. That is what we are guiding. If you look at this quarter also, if you remove that one-time kind of benefit that we got from quarter 4 and our expenses, you can clearly see that although like growth in top line is around 8% to 9%, but if you look at normalized EBITDA, there's a growth of 30%. So clearly that if at all we are able to see that, okay, quarter-on-quarter revenue is going to grow at the rate of 7%, 8%, which we are very confident, but as I said that macros and corporate results and all that are expected to be better than what we are seeing right now. And you will see investment and retail participate more actively in coming quarters. So clearly, it shows if you are able to maintain the trajectory of revenue at the rate of 7%, 8% quarter-on-quarter and keep our cost under control. Definitely, there is no reason for us to believe, to increase the cost right now because already platform has been built and cost of acquiring customers has been incorporated every quarter. So clearly, we are seeing at exit of quarter 4, this trajectory would be visible to all of you.

That was useful. And just to follow up, is fourth quarter really the critical quarter where you kind of take the call on pricing as well if by then, let's say, if numbers don't stack up well? Or do you kind of then move on to the next year, assuming that recovery gets delayed by a few quarters and as a result, pricing action may not be required by the end of the fourth quarter itself?

See, Abhijeet, what is important is that is trajectory in terms of gaining revenue or activity of customers is increasing expanding our margin? If answer is yes, we cannot predict market like precisely it is quarter four, March is when we need to take some kind of a decision. What we are looking at when customer activity is increasing and more customers we are acquiring, are you seeing expansion in margin? If you are seeing it waiting for one, two quarter, it does not matter. What is important in business don't try to create a pricing model, which becomes so kind of lucrative, it attracts more competition. So we believe what we have to look at is that as our cost of order increased, No. We have built the platform, so already we have taken a cost. And if we get increased kind of an order flow in maybe quarter four or one quarter later, should we change the price just because quarter four exit we did not see that OPM. I would say answer lies that, okay, what is our call on participation of Indian retail in this market for next three, four years? Is it going to increase? What we are seeing, it can we exit of fourth quarter or start of first quarter next financial year does not make a difference. I think that we will not be looking at price increase till that time we are seeing expansion in margin.

Got it. And sir, second one is that like in terms of customer inflow or acquisition that has been happening, any broad thoughts even if qualitative, in terms of if we can bring down the dependence on, let's say, having to acquire -- having to pay for acquiring new customers versus organic growth because that tends to have a sort of slightly better impact in terms of flow through to the bottom line.

Yes. So we are working on lots of parameters where quality of acquisition improves. And that's the reason we have been visible in IPL and all that. That's the long-term content strategy. And we are working on lots of things. Arief, if you can take this question and explain what through kind of activity we are doing to improve the quality of customer.

Thanks a lot for that question. So our acquisition strategy is fundamentally centered around three pillars. One is if there's an opportunity, we would want to keep gaining the market share there. Second is, as you rightly said, organic market share has to keep growing, and that for us has been the fastest-growing channel in the last eight-nine months, twelve months. So that is a key focus area for us. Third part that we focus on is how do we gain premium or high-value clients? These three would be the key pillars of strategy for us in our acquisition strategy.

Next question comes from the line of Sanketh Godha with Avendus Spark.

Sir, if I understood you right, you are saying that if due to any reason, if you fail to achieve 40- 45% OPM margin by end of the fourth quarter, that will not trigger a price hike in your decision. That's a fair understanding, sir?

Yes, right. So what is important when we are acquiring new customers and old customers getting active, are we seeing expansion in margin, that is important.

Got it. And second question which I had was that if you want to achieve 40-45% EBITDA margin by end of the quarter, you said revenue growth of 7-8% is per quarter -- sequential growth will help it, which means that you expect ex IPL overall operating cost should grow at just 2 to 3% every quarter to deliver that 40-45% EBDAT margin by end of the fourth quarter?

Yes. So it is like when we project something, it is based on that market will support. And what we believe is that when we make model, we believe Indian stock markets are going to give a CAGR of 15%. So if one year does not give, it is going to give in the next year. So it is very difficult to predict in which quarter like how market will behave. And if you look at FIIs inflow, there is an average of FIIs inflow, which happen in emerging markets and certain allocation comes to India. If they defer it for quarter, they are not going to defer it forever. So when we make business model, we are making for 3 years, 5 years. We don't take a call on one quarter, two quarters. But based on the trend what we are seeing, we give the estimation that it appears to be by exit of quarter four, we would be in this position. But what is important -- most important is if we are seeing more activity of customer and revenue growth is higher than increase in cost, which we have seen in this quarter, that gives us confidence that we have built a platform with certain capacity and which will -- cost will not increase proportionately increase in revenue. So proof of concept is this quarter and this is a strong belief based on projection that we make that further revenue increase that we see, we will not see proportionate cost increase. To answer your question, 2-3% or something like that would be in that region, that is what we believe.

Got it. Perfect, sir. And lastly, maybe last 2. See, RBI took a call of rate cut. Just whether you will take a decision on reducing your lending rate on margin trade funding compared to what 15-odd percent is what you charge. And if you don't do, then your incremental borrowing cost coming down because of the rate cut, will it expand your NIM or overall profitability on the margin trade funding book? I just wanted to understand whether you'll pass on the rate cut benefit to the customers or you will take better NIMs?

The margin funding book, the way it functions in terms of prices, it is not sensitive to RBI repo rate cut and all that. Across the years, you will see, we have seen different, different interest cycles. Lending rate almost in MTF has remained same. Until the time we take some conscious decision that we have to bring it down, that is what we did 2 quarters back. But overall, I don't feel that this is sensitive to what RBI does. And in terms of margin increment, Vineet, if you can take this question in terms of cost of borrowing, how it impacts.

Yes. So Sanketh, what typically happens is that today, the borrowings are all linked to MCLR. And therefore, the rate cut on the borrowing side happens slightly with a lag. But yes, there would be a margin expansion as we go along as we see the rate cut happening on the borrowing side, and that will help the business.

Got it. Perfect. And last one on philosophical side, sir. See, if I look at the overall market share across the products, it has broadly stabilized, whether it is cash or even F&Os and even to that extent, commodities. So is it fair to say that now your incremental growth of 7-8% or in general is a function of more market doing well or recovering from lows what we saw in fourth quarter? Or you think there is further more scope to gain market share?

Sanketh, what happens our activity of the customer depends on its wallet share and size of the wallet. And what we see, if at all wallet is expected to grow at a rate of 11-12%, we are going to see activity of our customer increasing at least at the rate of 11-12%. But now if you look back and see that what in kind of like wallet share they were giving for trading in market or investing in market, that got shrunk because of the regulatory changes. That has not come back to normal. So what we believe is that existing people who are active in this market, at least they will dedicate that amount what they were getting to the trading investment activity. So you will see that base effect that gets shrunk to a level, which is going to expand to get to normal. So when it gets to normal, you will see our OPM will go back to normal. Then we have to look at what kind of new clients addition is happening and that we can correlate with something like what expansion we are seeing in terms of trading volume and what increment we are seeing and what market share. In this three -four quarters, what will happen, we are aiming to gain market share. As I said, retail is not trading in as. So it is mostly, when you look at F&O, our contract is on option side. But we believe customer activity will go back to normal. That will help us to give this growth of 7% to 8% per quarter. But overall market share, I believe it will increment proportion to infusion of new customers in this market. And that also in new customer base, we have a market share of around 21-22%. But for them to become active and all that, there will be a lag effect. So overall, to answer your question, one, there is a base effect, which will help us to bounce back and give us a revenue growth of 7-8% for few quarters. Second would be because of under penetration and we gaining incremental market share. Incremental market share is 21-22%. But overall active market share is 16% or something. So we will see a small increment every quarter in market share.

As mentioned in the opening remarks, we also believe that India's growth story remains intact and the capital market will play a significant role because currently, out of the total population, we only have 12 to 13% of demat accounts. So the penetration level is quite low compared to developed countries. And in this Angel One as it focuses more towards the Tier 2 and Tier 3 customers, it will definitely play a crucial role in a growth trajectory going forward. However, over the years and the quarters, we have seen promoter shareholding coming down as well. So my question to Mr. Thakkar is that why does the reason behind promoter shareholding declining? And any plan for succession planning and what the future looks like?

Yes. So we are very bullish on India growth story. I believe that this per capita income, what we have seen in the past 20 years is nothing what we are going to see when we reach per capita income of $10,000 and all that. This story is yet to unfold and there is a big opportunity lying ahead of people going to capital market. So capital market is going to play a big role because if you look at retail for them wealth creation opportunity can come only when they start investing in equity. And today, they are not investing because of awareness, because of perception of risk and all that, that is going to get addressed through proper content, proper kind of an giving access to right information. So overall, we are very bullish in terms of participation, which is coming from existing customers. At this level, they are just satisfying the basic need and small amount is coming in capital market. So when you see India at a level of $10,000 per capita income, most of these flows will come into savings and kind of an like -beyond necessity they are going to put investment in increasing their lifestyle and all that. So overall, as you see Tier 2, Tier 3 has not yet participated in a big way, so we are seeing a big opportunity. And coming to your point, why promoter holding is decreasing, it is because professionals are taking over charge of this company. And we have to see that they are able to -- when they are creating wealth for all stakeholders, they are able to create wealth for them through ESOPs. So because of ESOP, you will see promoter holding will see declining, but it is not promoter is selling. It is because of that new allocation to ESOP plans and all that it appears to be, plus one or two promoters have declassified them as a promoter. Hence you will see that change. Nobody has sold their shares in the market.

But for the shareholding coming down, right, because I guess, last 3-4 years, if we see the trajectory, from 45% though it has come down to 35%. So basically, what you have said is that the ESOPs have been increased, and that's the reason the employee shareholding might have increased, right? That is my basic understanding.

So there are 2 combinations. ESOP plus one group of promoters that declassified as an ordinary shareholders.

Next question comes from the line of Raman KV with Sequent Investments.

Sir, I just want to understand with respect to Jane Street saga, what was the volume before the Jane Street and what's the volume after the Jane Street saga?

Jane Street is a very recent phenomenon. It is a matter of days that, it is very difficult to get the impact on that. But I have a view on that.

So are the volumes back to where it was before the Jane Street -- the entire Jane Street episode happened?

We don't give volume day to day. As I said, that Jane Street episode happened just a week or so before. We disclose our volume on a month end, okay? And this is too early to gauge any kind of episode which has happened and straightaway impact on that day or in two-three days. That does not tell you any story of where this capital market is moving towards. So my point is that Jane Street people are opportunist people who put money which is hot money just to gain something like arbitrage opportunity. Long term is decided by retail and FIIs who put their money for short and long term. If they are present, people like Jane Street would be replaced by some other player. So we are not saying there will be very big impact on capital market because of Jane Street.

Sir, and another follow-up, in the same line of this. Sir, with respect to how much was the company's broking revenue impacted because of the entire Jane Street episode? Was there any significant impact during the one...?

Again, I am repeating, Jane Street when did it happen? This last week. So we don't give numbers on a weekly or daily basis.

And just to add to that, Raman, I mean, we are not institutional brokers. So directly, there was no impact on us because of that.

Next question comes from the line of Sanjay Singh with Tenex Capital.

Sir, I just wanted to know that what is the incremental variable cost for -- not for client acquisition, but let's say, when your revenue grows by, let's say, 5%, what is the incremental margin on that revenue?

Vineet, if you can take this and explain that. Based on this quarterly number, also you can explain.

Yes. So it all depends on various factors. So if the revenue grows by 5%, then the margins will expand, and we've seen that in the last quarter. So the expansion is more than 5%, given the cost more or less remains stable. Again, it depends on what kind of acquisitions we do in a month and what revenue that we generate from those acquisitions. So there are multiple factors which play around this increase in the margin basis the increase in revenues.

No. What I was trying to say is, let's say, the incremental order gives you ₹20. So on that, there is no variable cost like any fees to SEBI that is over and above, right? So the ₹20 is purely for you to keep or there's anything which you need to pass on to somebody in that sense?

No. So the broking commission that we earn ₹20 is our income. There is no sharing other than the fact that if it comes through the assisted business, then there is a revenue sharing arrangement. Otherwise, the SEBI charges, the transaction charges, GST entity and all above that, yes.

And just on this thing that Mr. Thakkar was saying that growth should be 5%, 6%, 7%, 8% every quarter. But in July, at least the index level -- the NSE and BSE index level, NSE and BSE combined together have seen almost a 27% drop in options, which is July first 15 days over the Q1 average, so April, May, June quarter average. July first 15 days over the quarter average is around 27% drop in option volumes -- option premium and almost a 45% drop in future volumes in NSE. So I'm assuming you would see a similar drop in July or is it something very different?

No. Already, we had disclosed our number. July was a bit flattish and April, May...

You disclosed number for July, I mean?

June, June.

July, we haven't disclosed yet, yes.

But industry is around almost 27%, 28%. So is it fair to understand it will be something very similar or is it completely different?

Currently, what happens is a knee jerk reaction to Jane Street, and it takes time for players to get readjust to something like this scenario. So we have seen like a market if something happens like this, there's an impact for 10-15 days and things go back to normal. So we should not read anything from this number what we are seeing in 7 to 8 days. Only it has been volatile, it's not that every day it was low.

Okay. Okay. And I think more probably from an industry perspective, I mean we keep reading that India is 60% of option volume in the world, etc. And we have seen in the past, China, Korea with regulatory actions volumes coming down 80-90%. So what is your take? I mean I understand that you are invested in this business. But looking at global examples and with India having such high volume, do you see any risk of more regulatory action, which can clamp down on this pretty exceptional volume that India has seen?

See what happens, as I was answering previous this thing question, there is a concern like wallet of a customer, they would put some amount in this because of nature of kind of people like youth. Young people, they would like to leverage and try out something in the market. So you see currently, they prefer trading in option. But if you look at their journey, slowly they moved to investment and all that. So one of -- on my Twitter post I shared, I think, in FY20, total AUM of retail, direct and indirect, was around ₹16.7 lakh crores. And last year, AUM stood at around ₹70.8 lakh crores. Even if I take a CAGR of around 14-15% of market, so they are seeing an appreciation of ₹11-12 lakh crores per year. This is the new customer who came to the market. They started their journey in option. But ultimately, they have realized that wealth can be created in equity. So I don't think that their trading in option is concerning till the time they are moving their long-term money into equity. That is what we have seen growth in SIP, growth in AUM, in cash market. That is a very heartening figure, does not come on headlines all the time because we are just looking at negative. But what has happened, if you see, number of demat accounts has increased, they have come and put money in long-term investments. That's the reason we are seeing AUM going from ₹16.7 lakh crores to ₹70.8 lakh crores, that's a big, big amount. And today, they hold almost 18% of our market cap. So I think when people have earned so much and see such an occasion, they're going to remain in the market. But the way they will come, they will do some leverage product between margin funding or option. That should not concern us. What is important is we need to see how market expands, how people from Tier 2, Tier 3 are participating in this market. That's what I wanted to say. Retail has created a big wealth and this retail story, equity story is broader and deeper than what we think. It is not cyclical, it is structural.

Next question comes from the line of Bhuvnesh Garg with Magma Ventures.

My question is on content strategy. You mentioned the importance of content in customer engagement and acquisition. So we see other large players, so like Zerodha and Groww, they are also going very aggressive on content. So in that scenario, how do you measure your -- the effectiveness of your content compared to peers? And what do you think will give you an edge in this area compared to peers?

Every industry, there will be a place of 3-4 players, and they will have their own different strategy. And none of the players will be having a similar strategy because clients that we are targeting will be different, what they are targeting will be different. So the way we have designed our content strategy for all those will continue with that. And because of that, we are seeing a market share in new incremental client base at the rate of around 21-22%. And that clearly shows whatever we are doing till now is really working well and how do we improvise now by using latest technology and all that. Arief, if you can cover on this?

Thanks, DT. Just to add to that, AI will play a very important role in the way forward of content strategy for Angel One. It will give us that kind of width. It will give us that kind of presence to convert that width at even for vernacular languages and different geographies and all that. So especially for Tier 2, Tier 3 towns, the penetration of our content will increase. So we see that as a meaningful lever going forward in terms of our acquisition strategy.

Understood. Would it be possible to share any quantitative colour on this in terms of how is it benefiting in your client acquisition cost or reaching out to clients or engagement levels? Any quantitative colour?

I don't think sharing the numbers would be right here. So I would refrain from sharing those numbers.

The last question will be from the line of Pranav Gupta with Aionios Alpha Investment Managers. Since there is no reply from the line of Mr. Gupta, ladies and gentlemen, due to time constraints, we have reached the end of question-and-answer session. I would now like to hand the conference over for closing comments to Mr. Dinesh Thakkar. Please go ahead.

Thank you for joining us on the call today. I hope we had answered your questions satisfactorily. Should you require any assistance, please feel free to contact Hitul Gutka, our Head of Investor Relations or SGA, our Investor Relations Advisor. Have a good day.

Thank you. On behalf of Angel One Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.