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Q3FY26 Result Highlights Anand Rathi Wealth delivered a strong and consistent performance in Q3 FY26 (October–December 2025), reflecting the robustness of its market-agnostic wealth management model. The company reported a consolidated Profit After Tax of ₹100 crore, registering a healthy 30% YoY growth, while total revenue increased 25% YoY to ₹306 crore, driven by steady client engagement, healthy inflows, and stable product economics. Profit Before Tax rose 30% YoY to ₹135 crore, highlighting sustained operating leverage and disciplined cost management. During the quarter, Assets Under Management stood at ₹99,008 crore, marking a 30% YoY increase, supported by consistent net inflows and strong market participation. Mutual fund distribution remained a key growth driver, aided by continued traction in equity-oriented products and long-term client relationships. The company maintained superior profitability metrics, with annualised ROE at ~47%, underscoring the capital-light nature of the business. Management highlighted that Q3 performance remained largely insulated from short-term market volatility, reaffirming the strength of its uncomplicated, client-centric approach.

Key conference call takeaways

AUM Growth, Inflows & Client Mix

• Overall AUM and inflows: Total AUM grew 30% YoY to Rs.99,008 crore as of December 2025. During 9M FY26, net inflows stood at Rs.10,078 crore, reflecting healthy client engagement despite market volatility. This demonstrates resilience of the franchise and growing trust among HNI and UHNI clients.
• Equity mutual fund strength: Equity mutual fund net inflows reached Rs.6,082 crore during 9M FY26. Management highlighted that the firm's share in national equity MF net mobilisation has increased meaningfully over the years, despite not offering a low-cost advisory model, underscoring strong distribution capability and client confidence.
• Client contribution mix: AUM growth continues to be well balanced, with approximately 60% driven by existing clients through wallet-share expansion and 40% from new client additions. Management expects this mix to remain structurally stable, indicating a mature franchise focused on long-term relationships rather than upfront asset gathering.

Business Model & Product Strategy

• Distribution-only positioning: Management firmly reiterated its decision to remain a distribution-only platform, avoiding advisory due to inherent conflicts when commissions coexist with advice. True advisory, in management’s view, requires complete elimination of commissions, which is economically impractical at the company’s current revenue scale.
• Product mix movement: Sequential decline in “other product” revenues during Q3 was attributed to lower primary issuances versus Q2, rather than any structural change in client preference. The company continues to design portfolios based on suitability and long-term outcomes rather than near-term revenue optimisation.
• Structured products transparency: Management disclosed that matured structured products delivered an average yield of ~1.17% p.a., compared to ~1.09% on mutual funds. The incremental ~8 bps economics reinforces that structured products are not being pushed for excess commissions, supporting transparency and long-term client trust.

Relationship Managers (RM) & Scalability

• RM base and productivity: The RM base stood at 393 as of Q3 FY26, up modestly from 380 in FY25. While additions appear limited, management clarified that productivity improvements and deeper client engagement enable strong growth without aggressive headcount expansion.
• Attrition and retention: Six recent RM exits resulted in minimal disruption, with nearly 88% of the associated AUM retained. In FY25, AUM loss due to RM attrition was limited to ~₹99 crore, highlighting strong institutional client relationships and effective transition processes.
• Internal pipeline strength: Beyond visible RM numbers, the firm has a robust pipeline of over 450 account managers being trained for future RM roles. Management believes the current RM base is sufficient to support growth for the next three to four years without lateral hiring risks.

Cost Structure & Operating Leverage

• Employee cost trend: Employee costs declined from ~45% of revenue in FY25 to ~42% in 9M FY26, driven by operating leverage as RMs mature and scale their client books. This reflects productivity gains rather than cost rationalisation or under-investment in talent.
• Margin reinvestment approach: Management cautioned against extrapolating margin expansion aggressively. Any operating leverage benefits are intended to be reinvested into research, technology, risk management, and platform capabilities to ensure sustained growth and service quality.
• Long-term cost philosophy: Over the long term, management expects modest operating leverage to shift across cost heads while maintaining stable margins. The objective is to support 20–25% growth consistently over long periods rather than optimise for near-term margin peaks.

Management Guidance

• FY26 and FY27 guidance: Despite achieving 76% of FY26 revenue guidance and 78% of PAT guidance in nine months, management maintained full-year guidance, adhering to its conservative “under-promise, over-deliver” philosophy. FY27 growth guidance of 20–25% was reiterated.
• Visibility and risk management: Management refrained from upgrading guidance citing market-linked AUM volatility near year-end. Strong visibility from structured product rollovers, stable client behaviour, and RM scalability underpins confidence in medium-term growth.
• Culture and institution building: Leadership emphasised people-first governance, highlighted by the proposed “Chetan’s Peace of Mind Scheme” to formalise employee family protection. This reflects a long-term institution-building mindset, strengthening governance, employee engagement, and franchise durability.

Outlook & valuation

Anand Rathi Wealth Limited is well positioned to deliver 20–25% earnings growth over the medium to long term, supported by strong structural and company-specific drivers. India’s wealth management opportunity remains underpenetrated, with equity mutual fund AUM-to-GDP at ~13% versus ~50%+ in developed markets, while HNI population is expected to grow at ~14% CAGR over FY24–27. Against this backdrop, Anand Rathi Wealth has scaled its AUM to ₹99,008 crore (+30% YoY), driven by net inflows of ₹10,078 crore (+10% YoY) and steady market participation. Growth visibility remains strong with a balanced mix of ~40% AUM addition from new clients and ~60% from existing clients, alongside very low AUM attrition of ~0.3%. Operationally, the company continues to benefit from improving productivity, with AUM per RM at ~₹246 crore and a stable RM base of 393, supported by a strong internal pipeline. High operating leverage, reflected in PAT margin of ~33%, and best-in-class ROE of ~47%, underline the scalability of the capital-light model. Incremental contributions from Digital Wealth (AUM ₹2,359 crore, +29% YoY) and the OFA platform (6,850 subscribers) add optional upside without materially diluting margins.

On valuation, the stock trades at a premium to peers, reflecting superior growth visibility, profitability, and governance. With ~30% PAT CAGR over FY19–FY25, consistent shareholder returns via dividends, buybacks, and bonus issues, and FY26 guidance implying continued strong compounding, the premium appears justified. While near-term multiples may seem elevated, the combination of 20–25% earnings growth, ~45–50% ROE, low balance-sheet risk, and high cash generation supports sustained premium valuations. Anand Rathi Wealth is well-positioned to compound ahead of industry growth through advisory credibility, platform depth, and client-centric retention. At CMP of Rs.3,100, the stock is trading at 42x FY28EPS. We recommend HOLD rating on the stock.