IPO Note : Anand Rathi Share and Stock Brokers Ltd by Choice Broking Ltd
Salient features of the IPO:
* Anad Rathi Share and Stock Brokers Ltd. (ARSSBL), is an established fullservice brokerage house in India with over 30 years of experience. The company provide broking services, margin trading facility and distribution of financial products under the brand ‘Anand Rathi’ to a diverse set of clients across retail, high net worth individuals, ultra-high net worth individuals and institutions.
* The company generates the majority of its revenue from operations through its broking segment, which accounts for approximately 60% of total revenue. Non-broking services, including margin trading facilities and the distribution of investment products, contribute around 23%, while the remaining 17% comes from other operating revenue.
* As of March 31, 2025, the company provides broking and other financial services through 90 branches across 54 cities in India, and a network of 1,125 authorised persons operating in 290 cities nationwide.
* The IPO solely comprise of fresh issue (Rs. 550cr). The net proceeds from the fresh issue will be utilized for funding long-term working capital requirements of the company. Residual proceeds will be used for general corporate purpose.
Key competitive strengths:
* The highest ARPC amongst peer set
* Strategic use of Margin Trading Facility (MTF) Business to drive higher ARPC
* Full service brokerage house with diversified revenue streams
* Pan India presence combined with robust digital capabilities for client acquisition and servicing
* Established brand with more than a 3 decade legacy backed by experienced Promoters and a strong management team
* Strong track record of financial performance and consistent growth
Business strategy:
* Focus on improving average revenue per client by increasing client wallet share through cross selling varied investment solutions
* Increasing our geographical footprint as well as augmenting our client base
* Investing in Technology to Drive Business Excellence
* Attracting and retaining relationship managers to ensure continued growth
Risk and concerns:
* Operate under strict regulatory oversight
* The promoter and group companies face money laundering allegations
* Failing to grow the client base could significantly harm the business
* Promoter has pledged 29.51% of the Company’s equity
* Competition
Valuation Overview and IPO Rating
ARSSBL is a leading full-service brokerage firm in India with over 30 years of expertise, offering broking, margin trading, and financial product distribution to a diverse client base, including retail, HNIs, UHNWIs, and institutions. Revenue contribution stands at 60% from broking, 23% from non-broking services, and 17% from other operating income. At the upper price band, the issue is valued at a P/BV of 2.1x (based on postissue BVPS) and a P/E of 25.1x, which is a fully priced relative to its peers. The Company has demonstrated consistent growth in both revenue and margins over the years. With its strengthening brand presence and strategic focus on expanding its MTF business, a segment experiencing strong industry-wide growth further revenue enhancement appears likely. However, Intense competition among discount and full-service brokers continues to pressure pricing and margins. Moreover, the 29% promoter pledge may weaken investor confidence, affect stability, and elevate operational and valuation risks. Thus we assign a “Subscribe for Long Term,” rating for this issue.
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SEBI Registration no.: INZ 000160131
