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PAT beat driven by operational efficiency

* Anand Rathi Wealth’s (ARWM) revenue from operations grew 15% YoY and 24% QoQ to INR2.7b in 1QFY26 (12% beat).

* MF revenue rose 27% YoY to INR1.1b (in line), while revenue from the distribution of financial products grew 8% YoY to INR1.6b (23% beat) for the quarter.

* Operating expenses rose 5% YoY/12% QoQ to INR1.5b. CIR for 1QFY26 stood at 53.4% (MOFSLe: 62%) vs. 58.7% in 1QFY25.

* Employee costs came in at INR1.1b, up 6% YoY, and other expenses grew 3% YoY to INR314m.

* EBITDA stood at INR1.3b (+30% YoY; 41% QoQ), with EBITDA margin at 46.6% in 1QFY26 vs. 41.3% in 1QFY25 and 40.9% in 4QFY25 (MOFSLe at 38%).

* Other income for the quarter came in at INR102m (+31% YoY; down 47% QoQ; in line with our estimates). In 1QFY26, ARWM reported PBT of INR1.3b (+~28% YoY).

* AUM for the quarter stood at INR878b (+14% QoQ and +27% YoY). Digital wealth business AUM increased by 19% YoY to INR20.6b in 1QFY26.

* For 1QFY26, consolidated PAT stood at INR939m, up 28% YoY and 27% QoQ (35% beat)

Valuation and view

* ARWM is one of the few companies in the listed space that has consistently outperformed its stated guidance.

* For FY26, management guided for revenue/PAT of INR11.75b/INR3.75b vs. our estimates of INR10.78b/INR3.4b.

* We expect ARWM to post a CAGR of 19%/17%/19% in AUM/revenue/PAT during FY25-27E. We have a Neutral rating on the stock with a one-year TP of INR1,900 (premised on 36x Mar’27E P/E).

* We will update more details after the conference call scheduled for 11th Jul’25.

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