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Salient features of the IPO:

Anand Rathi Wealth Limited (ARWL) , is one of the leading non-bank wealth solution firms in India.

* AUM is diversified over mutual fund schemes and other financial products such as bonds, market linked debentures (MLDs) and other securities.

* As of Aug 31’ 2021, the company manages private wealth AUM of Rs29,472 cr.

Competitive Strengths

* Focus on underserved and less price sensitive HNI segment

* Uncomplicated, holistic and standardized solutions offered to clients based on an objective- driven approach

* One of the leading non-bank mutual fund distributor in India coupled with presence in non-convertible market lined debentures

Valuation: At the higher price band of Rs550, the issue is valued at P/E of 51x on FY21 EPS basis.

Below are few key observations of the issue:

* Wealth management industry holds a buoyant prospect in India given India’s long term economic prospect, positive demographics (high share of younger population), rising income levels and low penetration of financial products. Mutual Funds (MF) penetration in India stood at 16% in 2020 v/s global average of 63%. Number of millionaires is forecasted to increase at 1,269 in 2025 from 698 in 2020 with a CAGR of 12.7% above the global average of 8.4%. We believe underpenetrated Indian market presents huge upside growth potential for wealth managers. Meanwhile industry is gripped with concerns like high completion and regulatory risks.

* Anand Rathi Wealth Limited (ARWL) is one of the leading non-bank wealth solution firms in India. ARWL serves a wide spectrum of clients through a mix of wealth solutions, financial product distribution and technology solutions.

* AUM is diversified over mutual fund schemes and other financial products such as bonds, market linked debentures (MLDs) and other securities held by clients in their own demat accounts.

* Commission earned from selling MF schemes is one of the key components of revenue. ARWL is an AFMI registered mutual fund distributor and distribute MF schemes managed by leading AMCs and earns distribution commissions on a trail basis from these companies. The company has been ranked amongst the Top-3 non-bank MF distributors in India by gross commission earned during FY19-FY21.

* Apart from distribution of mutual funds, other business segment includes purchases non-convertible market linked debentures (MLDs) and offers them to its clients and earns income from these sales.

* As of Aug 31’ 2021, the company manages private wealth AUM of Rs29,472 cr which grew at a CAGR of 22.5% since FY19. Out of which equity MF accounted for 42%, debt MF at 15% (total MF at 57%), market linked debentures of 31.5% and direct equity and others at 11.7%.

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