Anand Rathi wealth limited is the wealth management backbone of the Parent company Anand Rathi Financial Services. It is one of the major non-banking solutions providing firms in the country. It is also amongst the top three companies in the mutual fund distribution business. In this article, we take a closer look at the Anand Rathi IPO Review and its possible future prospects.
The company carries out its business through its Private Wealth vertical. Through this, Anand Rathi Wealth provides services of financial product distribution, wealth solutions and technology solutions.
Anand Rathi Wealth Limited is an HNI oriented company. It started its business operation in 2002 as an AMFI. The company initially started its operation as a mutual fund distributor and, in progress, transformed itself as a company providing multiple financial solutions.
Currently, the company has an active client base of 6109 clients that are catered by a team of 233 Relation Managers. The company currently has offices in 11 cities and one office in Dubai. The Anand Rathi Wealth management service carries out its business operation of technological solutions through OFA, Omni Financial Advisors and DFA, Digital Wealth Financial Advisors. The company operates via:
| Private Wealth Management | Under this category, the company provided wealth management solutions to their clients via facilitating their investments in mutual funds, equity derivatives, debentures, and structured products. |
| Digital Wealth Management | Under this business operation, the company provides services to build a financial model that is economic and feasible. |
| Omni Financial Advisors | It is India’s major tech platform of IFA. |
OBJECTS OF THE IPO ISSUE:
- Prepayment of all or significant part of the loan on the company on a consolidated basis.
- To accomplish corporate targets.
BASIS OF THE ANAND RATHI WEALTH IPO OFFER:
- The company plans to increase their exposure in the HNI sector. The sector is less price-conscious and highly underserved.
- Anand Rathi has a reputation for providing clients with a simple, solutions-centred, and highly comprehensive objective-driven strategy.
- It is a Non-banking Institution and one of the top three mutual fund distributors highly renowned in India due to its past track record.
- The company has a strong market share in the structured products sector.
- The company also provides Value-added services, which includes safety and estate preparation.
- The company has developed an innovative work culture that helps them drive a unique strategy for carrying out their business operation and gain financial profitability and appropriate margins.
- The company has a PAN India presence due to its special Marketing Initiatives.
- Anand Rathi Wealth Limited, a mutual fund distributor, is backed by a strong promoter base and an excellent board of directors and management.
ALSO READ: RATEGAIN TECHNOLOGIES IPO
ANAND RATHI WEALTH IPO:
Anand Rathi Wealth Limited, a financial company, has its headquarters in Mumbai. The company has recently submitted its DRHP and is waiting for approval from SEBI to float its IPO in the market. The IPO has been brought forward as per the DRHP will be a purely OFS based IPO.
Through the OFS, the selling stakeholders will offload a total of 12,000,000 equity shares, which will correspond to Rs.1000 Crore. No Issue of fresh equity will be there in the IPO. The company in 2018 also got approval from SEBI for their IPO, but they dropped the plan considering the tough market scenario at that time.
The selling stakeholders are as follows:
| Anand Rathi Financial Services | 92.85 lakh equity shares |
| Anand Rathi | 3.75 lakh equity shares |
| Pradeep Gupta | 3.75 lakh equity shares |
| Priti Gupta | 3.75 lakh equity shares |
| Supriya Rathi | 3.75 lakh equity shares |
| Rawal Family Trust | 3.75 lakh equity shares |
| Feroze Azeez | 3.75 lakh equity shares |
| Jugal Mantri | 90,000 equity shares |
| IPO Opening Date | Dec 2, 2021 |
| IPO Closing Date | Dec 6, 2021 |
| Issue Type | Book Building Type |
| Face Value | Rs.5/ Equity Share |
| IPO Price | ₹530 to ₹550 per equity share |
| Market Lot | 27 Shares |
| Min Order Quantity | 27 Shares |
| Listing At | BSE, NSE |
| Issue Size | Rs.1000 Crore |
| Fresh Issue | 0 |
| Offer for Sale | 12,000,000 Equity Shares corresponding to Rs.1000 Crore |
| Basis of Allotment Date | Dec 9, 2021 |
| Initiation of Refunds | Dec 10, 2021 |
| The Credit of Shares to Demat Account | Dec 13, 2021 |
| IPO Listing Date | Dec 14, 2021 |
| Basis of Allotment Type | % Of the Allotment of the IPO Offer |
| Qualified Institutional Buyer | 50 |
| Non-Institutional Investor | 15 |
| Retail | 35 |
Invest In IPO with Upstox
FINANCIALS TRENDS OF ANAND RATHI WEALTH IPO:
| Particulars | For the year with amount in Crores | ||||
| 31-Mar-21 | 31-Mar-20 | 31-Mar-19 | |||
| Total Assets | 339.44 | 409.06 | 230.83 | ||
| Total Revenue | 279.25 | 336.41 | 284.19 | ||
| Profit After Tax | 45.11 | 61.61 | 58.43 |
| PARAMETER | MARCH 21 | MARCH 20 | YoY % |
| Earnings Per Share (Rs) | 16.39 | 22.71 | -27.84 |
| Book NAV/Share (Rs) | 86.10 | 68.63 | 25.46 |
| Core EBITDA Margin (%) | 26.33 | 32.16 | -18.12 |
| EBIT Margin (%) | 25.06 | 27.20 | -7.86 |
| Pre-Tax Margin (%) | 23.97 | 26.21 | -8.54 |
| PAT Margin (%) | 17.00 | 18.57 | -8.44 |
| Cash Profit Margin (%) | 23.52 | 24.91 | -5.59 |
| ROA (%) | 12.21 | 19.56 | -37.56 |
| ROE (%) | 21.36 | 39.83 | -46.37 |
| ROCE (%) | 26.50 | 51.31 | -48.36 |
| Asset Turnover(x) | 0.72 | 1.05 | -31.81 |
| Sales/Fixed Asset(x) | 2.29 | 3.38 | -32.23 |
| Working Capital/Sales(x) | 6.61 | -35.61 | 118.57 |
| Fixed Capital/Sales(x) | 0.44 | 0.30 | 47.56 |
| Net Sales Growth (%) | -20.04 | 19.97 | -200.34 |
| Core EBITDA Growth (%) | -24.72 | 5.52 | -547.49 |
| EBIT Growth (%) | -26.32 | 1.17 | -2340.85 |
| PAT Growth (%) | -26.79 | 5.44 | -592.04 |
| EPS Growth (%) | -27.84 | 3.22 | -965.09 |
| Total Debt/Equity(x) | 0.14 | 0.23 | -37.42 |
| Current Ratio(x) | 1.74 | 0.94 | 84.98 |
| Quick Ratio(x) | 1.74 | 0.95 | 83.70 |
| Interest Cover(x) | 22.95 | 27.38 | -16.21 |
PEER COMPETITION:
| COMPANY | TOTAL INCOME | RONW | NAV |
| ANAND RATHI WEALTH LIMITED | 1659 Crores | 18.69% | Rs. 58.47 per equity share |
| IIFL WEALTH MANAGEMENT | 279 Crores | 13.06% | Rs. 321.77 per equity share |
WEAKNESS AND THREATS OF ANAND RATHI WEALTH IPO:
- COVID-19 pandemic has hit the business operation along with the financial parameters of the company. During this period, the company’s profit and revenue dropped significantly due to business disruptions, a crash in the stock market and a decrease in the positive sentiment of new investments.
- The company’s financial parameters, mainly margin and revenue and financial product distribution, depend on their AUM growth, the performance of the mutual funds being distributed by them, and the effectiveness of the funds they distribute. Any regulatory changes that can lead to changes in the expense ratio will impact the company’s income.
- The company needs to follow strict guidelines, regulatory standards. Any Non-compliance or observation of the legal standards by the regulatory body will hurt the organization’s business.
- Anand Rathi has huge exposure in the rich segment profile category. Also, it has high exposure in Tier 1 regions. It restricts the reach of the company to other regions from where they can expand their client base.
- The company’s other challenge is to maintain an adequate capital position and register an increase in scale.
- The company is engaged in a highly competitive sector where it faces competition from many organized and unorganized players.
- Any ineffective by the firm regarding the mutual fund distribution can lead to the cancellation on behalf of the AMC.
- Annand Rathi is currently facing trial due to legal procedures against the company, promoters, board of directors and its group company. Any negative news on this front could lead to a detrimental impact on the brand value of the Anand Rathi Group.
- The company is vulnerable to breach in Cyber Security and Database Mismanagement.
- The company operates on a Monoline resource profile. The biggest threat to the company is the funding of their AUM. The AUM of the company is funded by hedged and secured market linked debentures. Any volatility in the market price of these debentures (equity, equity mutual fund, real estate) will have a significant
STRENGTHS AND GROWTH ASPECTS OF ANAND RATHI WEALTH IPO:
- Anand Rathi Wealth Limited’s major aim has been to improve the manager’s relationship and expand the network by appointing more managers to enhance business growth.
- The company in the past has shown a good track record in capitalizing on the current opportunities in the market, which helped them expand their geographical reach.
- The unique marketing strategy and brand building campaign have helped the Anand Rathi Group enhance its brand value.
- The company’s AUM under Private Wealth has grown at a CAGR of 20.17% in the last two years. Currently, the company value the private wealth AUM about Rs. 26,058 crores.
- The strong pedigree of the promoters and investors of the company is a major reason for the company outperforming other companies in its sector of business operation.
- The company follows an adequate risk management practice. It also has a very good financial risk profile considering the company is suspected of the volatility of the financial market for its AUM. The majority of the company’s investment is in Government Securities, which enables the company to maintain very good liquidity.
- Anand Rathi Wealth Limited has registered a growing scale of operations.
- The company has recently added new services to increase diversity in its service and product profile.
- The loan assets of the company have increased with a CAGR of 29% in the last 2 years.
- Anand Rathi Wealth Limited trusts its client base as more than 50% of its clients have been associated with the company for more than 3 years. These clients’ accounts for 72.19 per cent of the total Private Wealth AUM of the company.
- The company has an excellent leveraging process and strategy to grab the opportunities in the market for their clients.
- Anand Rathi Wealth Limited has strong financial, operational and Business Metrics.
- The company will also benefit from the growth of the sector. The Indian Equity Market is expected to become the fourth largest market on the global level. The whole sector will see an increase and rise of the sector by a CAGR of 14.27%.
Also Read : List of Mainboard IPO’s in India.
Also Read : List of Upcoming SME IPO’s in India.
PROMOTERS:
- Mr Anand Rathi
- Mr Pradeep Gupta
- Anand Rathi Financial Services Limited
| Pre-Issue Share Holding | 61.45% |
| Post Issue Share Holding |
CONTACT DETAILS:
Anand Rathi Wealth Limited
Express Zone, A Wing, 10th Floor, Western Express Highway,
Goregaon (E), Mumbai 400 063, Maharashtra, India
Telephone: +91 (22) 6281 7000
E-mail: csarwsl@rathi.com
Website: www.rathi.com/wealth
REGISTRAR:
Link Intime India Private Limited
C-101, 1st Floor, 247 Park,
Lal Bahadur Shastri Marg,
Vikhroli (West),
Mumbai 400 083, Maharashtra, India
Telephone: +91 22 4918 6000
E-mail: anandrathi.ipo@linkintime.co.in
Website: www.linkintime.co.in
LEAD MANAGER(S):
- Equirus Capital Private Limited
- BNP Paribas
- IIFL Securities Limited
- Anand Rathi Advisors Limited
