Anand Rathi Wealth Limited incorporated on March 22, 1995, is one of the leading non-bank wealth solutions firms in India and has been ranked amongst the Top-3 non-bank mutual fund distributors in India by gross commission earned in Fiscal 2019, 2020 and 2021. The company serves a wide spectrum of clients through a mix of wealth solutions, financial product distribution and technology solutions but it provide services primarily through its flagship Private Wealth (“PW”) vertical where it manage ₹ 294.72 billion in AUM as on August 31, 2021.
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The company i) acts as a mutual fund distributor, registered with the Association of Mutual Funds in India. It distributes mutual fund schemes managed by asset management companies and earns distribution commissions on a trail basis from asset management companies; ii) purchases non-convertible market linked debentures (“MLDs”) and offers them to its clients and earns income from these sales. They are currently present across 11 cities in India; namely, Mumbai, Bengaluru, Delhi, Gurugram, Hyderabad, Kolkata, Chennai, Pune, Chandigarh, Jodhpur and Noida and they have a representative office in Dubai.
Promoters & Shareholding:
Mr. Anand Rathi, Mr. Pradeep Gupta and Anand Rathi Financial Services Limited are the company promoters.
|Pre Issue Share Holding||74.73%|
|Post Issue Share Holding||48.82%|
Public Issue Details :
Offer for sale: OFS of approx. 12,000,000 equity shares of Rs. 5 aggregating up to Rs. 660 Cr.
Total IPO Size : Rs. 660 Cr.
Price band: Rs. 530 – Rs. 550.
Objective: To carry out OFS and to achieve the benefits of listing the equity shares on the stock exchanges.
Bid qty: minimum of 27 shares (1 lot) for Rs. 14,850 and maximum of 13 lots.
Offer period: 2 nd Dec 2021 – 6 th Dec 2021.
Date of listing: 14 th Dec 2021.
- One of the leading non-bank wealth solutions firms in India.
- Offers a number of investment solutions, including but not limited to debentures, mutual funds, equity derivatives, and structured products.
- Professional and experienced management team.
- Focus on the underserved and less price sensitive HNI segment.
- Focused towards attracting and retaining talent through an entrepreneurial work culture.
- Non-compliance with regulatory guidelines and directions/ observations during inspection by regulatory organisations may have adverse effect on its business.
- NSE has previously imposed a penalty on Anand Rathi Share and Stock Brokers Limited (“ARSSBL”), one of its group companies and any adverse finding in this proceeding may have an adverse effect on its brand.
- The wealth management industry is highly competitive.
- The volatility in the markets in recent times due to the pandemic could impact demand for its services.
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Subscribe or avoid?
Sectorial outlook – The Indian mutual fund industry has a long history of over 50 years and since 2003, the mutual fund industry has witnessed a healthy growth, supported by various regulatory measures as well as investor education 119 initiatives, where AUM of the Indian MF Industry has grown from ₹ 3.26 trillion as on 31st March 2007 to ₹ 36.73 trillion as on 30th September, 2021, more than 11.27 times in a span of about 14.5 years. The Indian Wealth Management market is on a sustained path of growth, given India’s long-term economic prospects, positive demographics, rising income levels and current low penetration. While the percentage of wealthy individuals in India is very small compared with developed markets, very high potential of growth in wealth is estimated in future. India has the key ingredients of a high-growth wealth management market, namely driven by a very large and young mass affluent segment; an increase in the wealth of global Indians; the Indian government’s push to control illegal channel of funds and push for tighter regulations of the capital markets. And this is expected have positive impact on the company and its business.
The financials (revenue and net profit) are shown in graph below:
Valuation – For the last 3 years average EPS is Rs. 12.81 and the P/E is around 43x on the upper price band of Rs. 900. The EPS for FY21 is Rs. 10.85 and the P/E is around 50x. Its listed is IIFL Wealth Management Limited (P/E 28.3x). Since the company P/E is between 43x and 50x and after comparing it with its listed peers and considering the decrease in revenue in the past one and a half year, the listing definitely is not cheap, also when you look at the GMP the indicative listing gains could be around 10 to 15%.
Recommendation – Considering the marginal listing gains, as well as aggressive valuations we would recommend investors with to “Avoid” to this IPO for now.
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