Companies focus remains on less price sensitive HNI segment:
Presence in Non-Convertible Market Linked Debentures (MLDs):
Objective-driven approach to uncomplicate and provide standardized solution to clients:
|Particulars (Rs. in Crores) FY21||Revenue CAGR (FY19 - FY21)||AUM CAGR (FY19 - FY21)||PAT (%)||ROE (%)*||EPS||PE (x)*||Revenue Yield||Cost/Income|
|Anand Rathi Wealth Limited||-3.00%||20.00%||18.65%||30.00%||10.85||18.60||0.99%||77.00%|
|IIFL Wealth Management||-7.00%||15.00%||28.47%||22.00%||42.01||22.00||0.50%||54.00%|
Dependence on securities market:
Higher competitive intensity:
Any regulatory changes can impact company’s Financials:
Anand Rathi Wealth Limited is one of the leading non-bank wealth solutions firms in India and has been ranked amongst the top three non-bank mutual fund distributors in India by gross commission earned over FY19-21. The company offers a wide product portfolio of wealth solutions, financial product distribution, and technology solutions to its clients. It provides services primarily through its flagship Private Wealth vertical where it manages Rs. 29,472 Cr in AUM as on Aug, 2021. Its AUM is a sum of 1) all third-party assets that generate commissions or incomes, which could be upfront and/or on a trial basis and 2) custody assets of clients having demat as well as MF accounts.
The company's PW (Private Wealth) vertical caters to 6,564 active client families, through a team of 233 RMs. In addition to the PW vertical, the company has 2 other new-age technology-led business verticals, i.e., Digital Wealth (DW) and Omni Financial Advisors (OFA).
The company has achieved a dominant position in the distribution of financial products, with a focus on the growing HNI segment. Currently, the company has a presence across 11 cities in India.
Anand Rathi Wealth Limited is one of the leading non-bank wealth solutions firms in India. The segment which company caters to is underpenetrated in India therefore looking at the big opportunity size for the industry and also the overall outlook for the Indian equity market looks very positive for the next couple of years as company is also into wealth management business and being the top three non-bank mutual fund distributors could be a major beneficiary. Company financials remains strong and also has well-experienced management with a strong brand name and distribution network.
At the upper price band of Rs 550, the PE works out to be 50.6x to its FY21 EPS of 10.85 and 18.6x to its annualized earnings of 5MFY22. Whereas its peer IIFL wealth is trading at a PE of 22x. Also, company’s ROE has been consistently higher than peers like IIFL Wealth. Although company’s FY19-21 growth in revenue & profits has lagged, but its current year growth has been encouraging and above its peers. On the back of a positive outlook for the industry, we recommend SUBSCRIBE to the IPO.
Use of Proceeds:
The company is doing Offer For Sale (OFS) there is no Fresh Issue and here is the gist of the offer:
Book running lead managers:
Anand Rathi Securities Limited, BNP Paribas Equirus, Capital Private Limited, IIFL Securities Ltd
|Particulars (Rs. in Crores)||FY19||FY20||FY21||H1FY22|
|Revenue from Operations||276.59||331.83||265.33||166.93|
|Employee Benefit Expenses||132.17||166.57||150.76||74.37|
|Total operating expenses||178.71||225.11||195.47||93.19|
|EBITDA Margin (%)||35.39%||32.16%||26.33%||44.17%|
|Depreciation and Amortization||16.27||21.05||17.29||6.51|
|Profit Before Exceptional Items and Tax||83.10||86.96||63.58||68.34|
|Share of restated profit /loss of associates /jv||-||-||-||-|
|Profit Before Tax||83.10||86.96||63.58||68.34|
|Effective Tax Rate (%)||29.68%||29.15%||29.08%||25.25%|
|Profit After Tax||58.43||61.61||45.10||51.09|
|PAT Margin (%)||21.13%||18.57%||17.00%||30.61%|