Anand Rathi Wealth Q3 FY25 earnings call

Anand Rathi Wealth Limited reported robust financial results for Q3 and 9M FY25. Consolidated total revenues for 9M FY25 grew by 33% year-on-year to INR 739 crores, with Profit After Tax (PAT) increasing by 34% year-on-year to INR 227 crores. The company achieved 75% of its revised revenue guidance of INR 980 crores and 77% of its revised PAT guidance of INR 295 crores for FY25. Q3 FY25 also saw strong growth, with total revenue at INR 244 crores (up 30% YoY) and PAT at INR 77 crores (up 33% YoY), maintaining a PAT margin of 31.7%.

Total Assets Under Management (AUM) expanded significantly by 39% year-on-year, reaching INR 76,402 crores. The company recorded its highest-ever quarterly net flows, contributing to a remarkable 69% year-on-year growth in total net flows for 9M FY25, amounting to INR 9,145 crores. Equity Mutual Fund net flows specifically grew by 51% year-on-year to INR 5,831 crores, increasing the share of Equity Mutual Funds in AUM to 55% as of December 2024 from 52% in December 2023.

The company continued to expand its client base, adding 1,515 new client families on a net basis during 9M FY25, bringing the total to 11,426. Client attrition, measured by AUM lost, remained exceptionally low at 0.28% for the 9M period. Anand Rathi Wealth also strengthened its human capital, adding 61 new relationship managers (RMs) on a net basis over the past 12 months, bringing the total RM count to 383. The company reported near-zero regret RM attrition in the last quarter, with only one RM with AUM greater than INR 40 crores leaving.

Management emphasized its consistent and market-agnostic performance, noting that profit grew over 33% YoY even during periods of Nifty decline. The mean quarterly year-on-year growth over the last 11 quarters has been 33.8%, with a low standard deviation of 4.3%, indicating predictable earnings. This consistency is attributed to a portfolio-level management approach, low client and RM attrition, and a focus on long-term client objectives rather than product-specific pushes or market trends.

Structured product mobilization remained strong, with primary mobilization at INR 1,347 crores in Q3 FY25 (up 9.4% YoY) and INR 4,630 crores in 9M FY25 (up 15.8% YoY). Management clarified that structured products are designed to be neutral to interest rate changes due to derivative pricing. The overall yield on distribution revenue is influenced by the average assets and the changing proportion of asset classes in the AUM, with equity mutual fund proportion increasing from 52% to 55%.

The digital wealth business saw its AUM grow by 23% year-on-year to INR 1,827 crores, serving 5,772 clients. The Omni Financial Advisor (OFA) business, a SaaS platform, now has 6,273 subscribers with platform assets of INR 1.4 lakh crores. The company is also pursuing international expansion, with the board approving the formation of a subsidiary in the UK to explore wealth management opportunities, expected to be incorporated within 6-9 months. Additionally, the company is exploring the utilization of its existing AIF license for Gift City operations to serve global clients and leverage tax benefits.

Management addressed analyst questions regarding the company's valuation, highlighting its industry-leading Return on Equity (ROE) and a low Price-to-Earnings Growth (PEG) ratio of 0.8. Despite increasing competition, including from discount brokers entering passive funds, the company remains confident in its client-centric, value-adding approach. It aims to achieve a 4% market share in total AUM and a 4.8% market share in net flows (excluding SIPs) in the coming years, driven by its differentiated strategy and consistent performance.