Company Update : Anand Rathi Ltd By Motilal Oswal Financial Services Ltd
PAT higher than est., mainly driven by other income
* Anand Rathi Wealth (ARWM)’s revenue from operations grew 20% YoY but declined 6% QoQ to INR2.2b in 4QFY25 (4% lower than our estimate). For FY25, its revenue jumped 30% YoY to INR9.4b.
* MF revenue rose 28% YoY to INR1b (in line), while revenue from the distribution of financial products grew 15% YoY to INR1.2b (7% lower than our estimate) for the quarter.
* Operating expenses rose 18% YoY to INR1.3b (flat sequentially). CIR for 4QFY25 stood at 59.1% (MOFSLe: 56.8%) vs. 60.3% in 4QFY24.
* Employee costs came in at INR1b, up 20% YoY, and other expenses grew 11% YoY to INR300m.
* EBITDA stood at INR908m, 9% below our estimate (+24% YoY; -15% QoQ), with EBITDA margin at 40.9% in 4QFY25 vs. 39.7% in 4QFY24 and 45.2% in 3QFY25 (MOFSLe at 43.2%).
* Other income for the quarter came in at INR194m (+51% YoY; +171% QoQ; 151% above our estimate). In 4QFY25, ARWM reported a PBT of INR995m (+~26% YoY).
*AUM for the quarter came in at INR771b (+1% QoQ; +30% YoY). AUM for the Digital Wealth business grew ~17% YoY to INR18.1b.
* For 4QFY25, the consolidated PAT stood at INR737m (+30% YoY; -5% QoQ; 5% beat). For FY25, it grew 33% YoY to INR3b.
* The Board has declared a final dividend of INR7 per equity share
Valuation and view
* ARWM is one of the very few companies in the listed space that has consistently outperformed its stated guidance.
* For FY26, management guided a revenue/PAT of INR11.75b/INR3.75b vs. our estimates of INR11.59b/INR3.78b.
* We expect ARWM to post an AUM/revenue/PAT CAGR of 20%/23%/25% during FY25-27. The current valuation of 31x FY27E P/E prices in a robust cash generation (OCF of INR9.1b during FY25-27E), an RoE of 40%+, and a healthy balance sheet. We have a Neutral rating on the stock with a oneyear TP of INR2,000 (premised on 36x Sep’26E P/E).
* We will update more details after the conference call scheduled for 11th Apr’25.
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