Please refer to important disclosures at the end of this report
1
Anand rathi Wealth Ltd. (ARWL) is one of the leading non-bank wealth solutions
firms in India and have been ranked amongst one of the three largest non-bank
mutual fund distributors in India by gross commission earned in Fiscal 2019, 2020
and 2021. The company was incorporated on March 22, 1995 & today serve a
wide spectrum of clients through a mix of wealth solutions, financial product
distribution and technology solutions. The company acts as a mutual fund
distributor, (registered with the Association of Mutual Funds in India) and also
purchases non-convertible market linked debentures (“MLDs”) and offers them to
its clients and earn income from sales.
Positives: (a) Focus on the underserved HNI segment of great market potential. (b)
Standardized solutions offered to clients based on an objective-driven approach. (c)
One of the top three leading mutual fund distributors in India. (d) Focus on value-
added services.
Investment concerns: (a) Reduce distribution commission income through regulatory
change. (b) Non-compliance with regulatory guidelines. (c) Any kind of reputational
loss. (d) Continuing impact of the COVID-19.
Outlook & Valuation: ARWL had reported de-growth in revenue by 20.0% YoY in
FY2021 due to the Covid 19 pandemic while net profits contracted by 26.8% YoY.
However asset under management witnessed strong growth of 45.5% YoY to
`26,669 crore led by the private wealth vertical. Moreover AUM has further
registered a growth of 13.3% to `30,209 crore as of 31st Aug’21. AUM growth has
been driven by high yielding equity and MLD assets which have led to strong
performance by the company in the first five months of FY2022. For the first five
months of FY2022 ARWL has reported revenues of `166.9 crore while net profits at
`51.1 crore has already surpassed FY2021 PAT of `45.1 crore. At the higher end
of the price band ARWL will be trading at P/E multiple of 18.7x its annualized EPS
for 5MFY2022 which we believe is reasonable given higher proportion of equity
and MLD assets. Given reasonable valuations and strong growth prospects due to
buoyant capital market, we would recommend SUBSCRIBE to the IPO.
Key Financials
FY2019
FY2020
FY2021
5MFY22
276.6
331.8
265.3
166.9
-
20.0
-20.0
-
58.2
60.5
45.4
51.2
-
4.0
-25.0
-
35.4
32.2
26.3
44.2
14.0
14.8
10.8
-
39.2
37.1
50.8
-
18.5
12.3
9.5
-
42.8
31.3
17.8
-
50.7
33.3
17.9
-
8.2
7.1
8.5
-
Source: Company, Angel Research; Note: Valuation ratios at upper price band; *Consolidated
SUBSCRIBE
Issue Open: Dec 02, 2021
Issue Close: Dec 06, 2021
Offer for Sale: `660 cr
QIBs 50% of issue
Non-Institutional 15% of issue
Retail 35% of issue
Promoters 48.8%
Others 51.2%
Fresh issue: --
Issue Details
Face Value: `5
Present Eq. Paid up Capital: `20.8 cr
Post Issue Shareholding Pattern
Post Eq. Paid up Capital: `20.8cr
Issue size (amount): `660 cr
Price Band: `530-550
Lot Size: 27 shares and in multiple thereafter
Post-issue mkt. cap: * `2,206 cr - ** `2,289 cr
Promoters holding Pre-Issue: 74.7%
Promoters holding Post-Issue: 48.8%
*Calculated on lower price band
** Calculated on upper price band
Book Building
Jyoti Roy
+022 4000 3600, Extn: 6810
Anand Rathi Wealth Limited
Anand Rathi Wealth Limited | IPO Note
December 01, 2021
Anand Rathi Wealth Limited | IPO Note
Dec 01, 2021
2
Company background
Anand Rathi Wealth Limited (“ARWL”) is a mumbai-based company incorporated
on March 22, 1995. It commenced activities in Fiscal 2002 as an AMFI registered
mutual fund distributor and have evolved into providing, well researched solutions
to its’ Clients by facilitating investments in financial instruments through an
objective driven process.
As of August 31, 2021, PW (Private Wealth) vertical caters to 6,564 active client
families, serviced by a team of 233 RMs. Company is currently present across 11
cities in India, namely, Mumbai, Bengaluru, Delhi, Gurugram, Hyderabad,
Kolkata, Chennai, Pune, Chandigarh, Jodhpur and Noida and have a
representative office in Dubai. The company’s Promoters are Anand Rathi, Pradeep
Gupta and Anand Rathi Financial Services Limited.
Issue details
The IPO is made up of offer for sale of `660 Cr by promoter & investor
shareholders.
Pre and post IPO shareholding pattern
No of shares
(Pre-issue)
%
(Post-issue)
%
Promoter
31,102,025
74.7
20,317,042
48.8
Public
10,514,202
25.3
21,299,185
51.2
Total
41,616,227
100.0
41,616,227
100.0
Source: Company, Angel Research & RHP.
Objectives of the Offer
To achieve the benefits of listing the Equity Shares on the Stock Exchanges.
Key Management Personnel
Anand Rathi is the Promoter, Chairman and Non-Executive Director of the
company. He has been associated with the company since March 18, 2005. Prior
to joining the company, he was with Aditya Birla Nuvo Ltd, with BSE (where he also
held the position of President) and was one of the first directors of CDSL.
Pradeep Gupta is the Non-Executive Director of the company. He has been with
the company since March 18, 2005. He has promoted Anand Rathi Share and
Stock Brokers Ltd (formerly known as Navratan Capital and Securities Pvt Ltd) and
thereafter he joined ARFSL (formerly known as Anand Rathi Securities Pvt Ltd) with
Anand Rathi in the year 1998. He has over 30 years of experience in capital
markets.
Amit Rathi is the Non-Executive Director of the company. He has been associated
with the company since March 18, 2005. He is associated with the private wealth
management and investment banking businesses of the Anand Rathi Group. He is
also a director on the board of their corporate Promoter, ARFSL (formerly known as
Anand Rathi Securities Pvt Ltd).
Ramesh Chandak is the Independent Director of the company. He has been
associated with the company since March 15, 2018. He was also the managing
director of KEC International Ltd.
Anand Rathi Wealth Limited | IPO Note
Dec 01, 2021
3
Exhibit 1: Profit & Loss Statement
Y/E March (` cr)
FY2019
FY2020
FY2021
5MFY22
Total operating income
276.6
331.8
265.3
166.9
% chg
-
20.0
-20.0
-
Total Expenditure
178.7
225.1
195.5
93.2
Employee Benefit Expenses
132.2
166.6
150.8
74.4
Other Expenses
46.5
58.5
44.7
18.8
EBITDA
97.9
106.7
69.9
73.7
% chg
-
9.0
-
5.5
(% of Net Sales)
35.4
32.2
26.3
44.2
Depreciation& Amortization
16.3
21.0
17.3
6.5
EBIT
81.6
85.7
52.6
67.2
% chg
-
-
-38.6
-
(% of Net Sales)
29.5
25.8
19.8
40.3
Finance costs
6.1
3.3
2.9
0.9
Other income
7.6
4.6
13.9
2.0
(% of Sales)
2.7
1.4
5.2
1.2
Recurring PBT
83.1
87.0
63.6
68.3
% chg
-
4.6
-26.9
7.5
Tax
24.7
25.3
18.5
17.3
PAT
58.4
61.6
45.1
51.1
% chg
-
5.4
-26.8
(% of Net Sales)
21.1
18.6
17.0
30.6
Basic & Fully Diluted EPS (Rs)
14.0
14.8
10.8
-
Source: Company, Angel Research
Anand Rathi Wealth Limited | IPO Note
Dec 01, 2021
4
Exhibit 2: Consolidated Balance Sheet
Y/E March (` cr)
FY2019
FY2020
FY2021
5MFY22
SOURCES OF FUNDS
Equity Share Capital
13.5
13.5
13.8
20.8
Other equity (Retained Earning)
110.5
172.0
227.5
266.0
Non-Controlling interest
12.5
11.6
11.6
11.6
Shareholders’ Funds
136.5
197.1
252.9
298.4
Total Loans
0.6
41.7
33.4
31.2
Other liabilities
23.8
18.7
7.5
5.3
Total Liabilities
160.9
257.5
293.8
335.0
APPLICATION OF FUNDS
Property, Plant and Equipment
7.5
8.9
7.2
6.7
Right-of-use Asset
31.3
25.1
12.3
8.7
Capital work in progress
-
65.4
69.0
70.2
Goodwill
2.9
2.9
2.9
2.9
Other Intangible assets
7.9
37.3
32.2
30.1
Intangible assets under development
31.7
-
-
-
Current Assets
112.4
150.6
94.1
147.6
Investments
75.1
1.8
2.7
2.8
Trade Receivables
11.0
9.1
10.9
12.9
Cash and cash equivalents
11.4
28.3
65.3
57.3
Bank balances other than above
0.0
0.0
0.0
0.0
Loans
0.2
64.9
-
26.8
Other Financial Assets
12.2
33.3
13.7
46.4
Other Current Assets
2.4
13.2
1.5
1.4
Current Liability
70.0
151.6
45.6
67.3
Net Current Assets
42.4
-0.9
48.5
80.3
Other Non-Current Asset
37.2
118.8
121.7
136.2
Total Assets
160.9
257.5
293.8
335.0
Source: Company, Angel Research
Anand Rathi Wealth Limited | IPO Note
Dec 01, 2021
5
Exhibit 3: Consolidated Cash flows
Y/E March (`cr)
FY2019
FY2020
FY2021
5MFY22
Operating profit before changes
101.8
110.6
83.2
74.6
Net changes in working capital
0.1
49.7
-80.3
-10.7
Cash generated from operations
101.9
160.2
2.9
63.9
Direct taxes paid (net of refunds)
-34.8
-19.9
-23.9
-29.1
Net cash flow operating activities
67.1
140.3
-21.0
34.8
Sale/(Purchase) of Plant and Equipment
-3.9
-49.8
-1.3
-1.6
Dilution of NCI
-2.0
-
0.0
0.0
Acquisition of Intangible Assets
-0.2
-0.8
-
-
Intangible Assets
-8.2
-5.2
-
-
Dividend received
-
0.0
0.0
0.0
Interest Income
1.0
1.0
4.7
1.4
Others
-29.0
-96.8
71.3
-29.0
Cash Flow from Investing
-42.3
-151.7
74.8
-29.1
Loan Taken/(Repayment)
-0.1
41.1
-8.4
-2.1
Interest Paid
-3.3
-0.6
-1.0
-0.4
Issue of Shares
0.0
0.1
10.8
0.1
Dividend paid
-
-
-6.9
-6.9
Lease Payments
-10.5
-12.4
-11.2
-4.3
Cash Flow from Financing
-13.9
28.2
-16.7
-13.6
Inc./(Dec.) in Cash
10.8
16.8
37.1
-8.0
Opening Cash balances
0.57
11.41
28.25
65.32
Closing Cash balances
11.4
28.3
65.3
57.3
Source: Company, Angel Research
Key Ratios
Y/E March
FY2019
FY2020
FY2021
Valuation Ratio (x)
P/E (on FDEPS)
39.2
37.1
50.8
P/CEPS
30.6
27.7
36.7
P/BV
18.5
12.3
9.5
EV/Sales
8.2
7.1
8.5
Per Share Data (Rs)
EPS (Basic)
14.0
14.8
10.8
EPS (fully diluted)
14.0
14.8
10.8
Cash EPS
18.0
19.9
15.0
Book Value
29.8
44.6
58.0
Returns (%)
ROE
42.8
31.3
17.8
ROCE
50.7
33.3
17.9
Source: Company, Angel Research
Anand Rathi Wealth Limited | IPO Note
Dec 01, 2021
6
Research Team Tel: 022 - 40003600 E-mail: [email protected] Website: www.angelone.in
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