Anand Rathi Share and Stock Brokers Limited — Q1 FY27 earnings call

Call held 15 Jul 2026

Management summary

Anand Rathi Share and Stock Brokers Limited reported a strong Q1 FY27 with significant revenue and profit growth, driven by expanding asset bases and a balanced revenue mix. Despite navigating a complex operating environment marked by geopolitical tensions and regulatory changes, the company demonstrated resilience. An exceptional expense was recognized due to a fraudulent activity, but management is taking steps for recovery and enhanced controls, while maintaining a positive outlook for the capital market and its strategic growth initiatives.

Highlights

  • Total revenue from operations grew 22.37% YoY to ₹2,461 million.

  • EBITDA increased 30.19% YoY to ₹973 million, with a healthy margin of 39.54%.

  • PAT (before exceptional items) surged 71.2% YoY to ₹391 million, achieving a 16% margin.

  • Asset Under Custody (AUC) grew 21.44% YoY to ₹1.13 lakh crores, and Distribution AUM increased 25.82% YoY to ₹94,791 million.

  • The company's external credit rating was upgraded to A1+ for short-term and A+ for long-term bank facilities, enabling increased borrowing limits at reasonable cost.

Concerns

  • An exceptional expense of ₹209.96 million was recognized due to fraudulent off-market transfers for two clients.

  • The broking industry is transitioning to a phase of more measured activity, with moderation in the derivative segment due to evolving regulatory frameworks.

  • MTF loan book interest earned remained flat QoQ despite book growth, attributed to a market fall in March.

Key financials

  1. Revenue 2,461 Mn +22.4%YoY
  2. EBITDA 973 Mn +30.2%YoY
  3. EBITDA Margin 39.5%
  4. PAT (before exceptional) 391 Mn +71.2%YoY
  5. PAT Margin (before exceptional) 16%
  6. PAT (after exceptional) 233.51 Mn +2.4%YoY
  7. PAT Margin (after exceptional) 9.5%
  8. Exceptional Expense 209.96 Mn
  9. Asset Under Custody 11,30,000 Mn +21.4%YoY
  10. MTF Book 13,318 Mn +55%YoY
  11. Distribution AUM 94,791 Mn +25.8%YoY
  12. Debt-Equity Ratio 0.81
  13. MTF Yield 14%

What they filed

Q1 FY27: revenue up 22.4%, net profit up 0.0% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue231 204 200 201 227 −2%248 +22%256 +28%246 +22%
EBITDA86 77 73 75 93 +8%101 +31%110 +51%97 +29%
Net profit33 22 18 23 28 −15%37 +68%42 +133%23 +0%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of Revenue
1,983 Mn Total
  • Broking Income 1,280 Mn 64.5%
  • MTF Interest Income 428 Mn 21.6%
  • Distribution Income 275 Mn 13.9%

Capital allocation

high confidence
  • Debt Debt disclosed
    • Rate reset External credit rating upgraded to A1+ for short-term and A+ for long-term bank facilities, enabling increase in borrowing limit at reasonable cost.
    During the quarter, our external credit rating was upgraded to A1+ for short-term bank facilities and were assigned a credit rating of A+ for long-term bank facilities. Our debt-equity ratio stands at 0.81 as of 30th June, which enables to increase our borrowing limit at reasonable cost.

Guidance & targets

Volume

  • MTF Book Volume · FY27 · High confidence ₹1,750 crores to ₹1,800 crores
    Going ahead, we expect our MTF book to reach around ₹1,750 crores to ₹1,800 crores by end of this financial year

    — Pradeep Gupta

  • Distribution AUM Growth Volume · High confidence 40%
    while distribution AUM is targeted to scale by 40%

    — Pradeep Gupta

Revenue Mix

  • Broking and Non-Broking Income Mix Revenue Mix · High confidence 50-50 mix
    we will continue to move towards maintaining a 50-50 mix between our broking and non-broking income

    — Pradeep Gupta

Revenue

  • Total Revenue Growth Revenue · Medium confidence 20% to 25%
    our typical endeavour is going to be that we are going constantly going to grow between, you know, 20% to 25%.

    — Pradeep Gupta

Profitability

  • PAT Growth Profitability · Medium confidence 30% to 35%
    our bottom line which is PAT should grow by somewhere around 30% to 35%.

    — Pradeep Gupta

What to watch in Q2 FY27

Recovery of exceptional expense from fraud

next quarter (or as legal proceedings progress)
Current ₹209.96 million recognized as exceptional expense
Target Partial or full recovery through EOW action or insurance claim

Why it matters

Direct impact on profitability; recovery would improve future PAT.

Any recoveries from such claim or through legal proceedings will be accounted for as and when the realization becomes reasonably certain.

Risks & concerns

  • Fraudulent off-market transfer leading to exceptional expense

    high

    ₹209.96 million recognized as exceptional expense; EOW investigation, insurance claim, and internal control enhancements underway.

    Management acknowledged

  • Geopolitical tensions and global macroeconomic uncertainties

    medium

    Shaped a complex operating environment, leading to temporary crude oil spikes and currency volatility.

    Management acknowledged

  • Foreign outflow from Indian markets

    medium

    Totaling ~₹1.43 lakh crores in Q1 FY27, though mellowing in early July.

    Management acknowledged

  • Broking industry transition to measured activity and moderation in derivatives

    medium

    Driven by evolving regulatory framework (SEBI measures on derivatives, RBI capital market exposure).

    Management acknowledged

  • Monsoon deficit (El Niño effect)

    low

    Sharp 40% rainfall deficit in June, though recovering in early July.

    Management acknowledged

  • MTF book susceptibility to risk

    low

    Management states MTF book is largely for cash market transactions, not F&O, with strict internal controls and no losses since 2017.

    Analyst downplayed

Q&A highlights

8 direct
Macro outlook, market volatility, regulatory curbs, and non-broking growth strategy. Direct
I personally feel that market, capital market conditions are good and it's good for, broking industry and capital market related activities also. ... we have, taken a route to go for a non-broking side, which consists of all the distribution of financial products as well as margin trading funding book.

Provides management's overall view on market conditions and their strategic pivot towards non-broking segments to mitigate volatility.

Asked by Nachiket Kale

Risk management approach for MTF book. Direct
One is we are not providing. This MTF book is not being allocated by anyone towards F&O side. This is largely for a cash market transaction. So, there is a security of cash market. ... we have been working in this space since 2017 and there is not a single paisa or pie is being lost or we have seen any kind of a delinquencies in our, this MTF book.

Addresses concerns about MTF book risks, highlighting conservative lending practices and a strong track record of zero losses.

Asked by Nachiket Kale

Flat MTF interest income despite book growth and client acquisition strategy. Direct
in March month actually the book got reduced because you might be aware about that particular, in that particular month, the market fell down by 15% approximately in terms of mid-cap side. ... our large portion of book position is below ₹1 crores. That says that we are not taking a concentrated effort on a specific customer base.

Explains the discrepancy in MTF income and clarifies the company's client targeting strategy, focusing on mature investors and diversified book.

Asked by Yash Jhurani

Customer acquisition cost for older clients. Direct
we do not really maintain and manage from a customer acquisition cost because of a simple reason we do have RMs who are supporting and assisting our customers all across the country. ... we have B2B channel which is equally strong and there all our business partner or franchisee, they are there on the complete variable model. So they are also acquiring clients on constant basis based on their relationship and naturally in that particular vertical the cost is again the zero in terms of any acquisition.

Reveals the company's cost-effective client acquisition model through relationship managers and B2B channels, suggesting sustainable growth without high marketing spend.

Asked by Yash Jhurani

Exceptional expense of ₹209.96 million due to fraudulent activity and security enhancements. Direct
this is a typical fraudulent activity which has occurred in our depository side. ... We went into a detail, checked all our processes, we found all the -- maximum processes are being followed and there are certain amount of activity for which we appointed, you know, outside agency including EY to do forensic audit as well as to run through a complete check of our processes and systems.

Provides details on a significant one-time expense, outlining the nature of the fraud, steps taken for recovery (EOW, insurance), and internal control improvements.

Asked by Arka Bhattacharjee

Plans for a subsidiary in Dubai and target AUM for NRI customers. Direct
we have passed a resolution to create an subsidiary unit in Dubai and get necessarily necessary light necessary licenses so that we can address the need of those customers without any regulatory hurdles. ... we are not really providing any kind of a such, platform or such, activity at our end.

Clarifies the strategic intent behind the Dubai subsidiary, focusing on serving NRI clients for Indian investments, while also stating current limitations on offering international products.

Asked by Arka Bhattacharjee

Q-o-Q dip in non-broking segment. Direct
in distribution JFM period is largely also driven by insurance businesses. Most of the insurance businesses happen in January, February, March. ... And that's the reason you will find your JFM quarter is going to be always higher and April, May, June the selling of those insurance policies comes down and that makes an impact in Q-on-Q basis.

Explains seasonal variations in non-broking revenue, particularly due to the timing of insurance sales, providing context for the QoQ decline.

Asked by Shweta Sharma

Elevated debt-equity ratio and future leverage plans. Direct
Our idea is surely there to increase the debt-equity ratio. ... Currently we are there just at 0.8 times and we are constantly going for the borrowing to improve our both on the MTF book side as well as the overall total I can say on the book size.

Management confirms a strategic intent to increase leverage to fund growth in MTF and working capital, indicating confidence in their ability to manage debt.

Asked by Shweta Sharma

2 min read 7 chapters

Detailed narrative

Q1 FY27 Financial Performance Overview

Anand Rathi reported a robust Q1 FY27, with total revenue from operations reaching ₹2,461 million, marking a 22.37% year-on-year growth. EBITDA grew by 30.19% to ₹973 million, resulting in a healthy EBITDA margin of 39.54%. PAT before exceptional items increased by 71.2% to ₹391 million, with a margin of 16%, while PAT after exceptional items stood at ₹233.51 million, growing 2.35% YoY.

Asset Growth and Diversification Strategy

The company's asset base continued its strong growth trajectory, with Asset Under Custody (AUC) reaching ₹1.13 lakh crores, up 21.44% YoY. The MTF book expanded by 55% YoY to ₹13,318 million, and Distribution AUM grew 25.82% YoY to ₹94,791 million. Management reiterated its strategy to maintain a 50-50 mix between broking and non-broking income to reduce market volatility impact, with broking income at ₹1,280 million and non-broking segments (MTF interest and distribution) contributing ₹428 million and ₹275 million respectively.

Fraudulent Activity and Recovery Efforts

An exceptional expense of ₹209.96 million was recognized this quarter due to fraudulent off-market transfers affecting two dormant depository clients. The company has reported the incident to relevant authorities, including the Economic Offence Wing (EOW), which has traced and attached assets of beneficiaries. Anand Rathi has also filed an insurance claim and engaged an external consultant to strengthen internal controls, with recoveries to be accounted for when realized.

Market Outlook and Regulatory Environment

Management expressed a positive long-term outlook for the Indian capital market, expecting continued growth over the next three years, despite current geopolitical tensions and global macroeconomic uncertainties. They acknowledged the impact of foreign outflows totaling ₹1.43 lakh crores in Q1 FY27 and evolving regulatory frameworks from SEBI and RBI, which aim to strengthen market resilience and investor protection, particularly in the equity derivative segment.

Capital Structure and Credit Rating

The company's debt-equity ratio stood at a comfortable 0.81 as of June 30, 2026, which management intends to increase to support growth in the MTF book and overall business. This strategy is supported by an upgrade in their external credit rating to A1+ for short-term and A+ for long-term bank facilities, enhancing their ability to borrow at reasonable costs.

Client Engagement and Digital Initiatives

Anand Rathi is focusing on deepening client engagement through an enhanced digital platform offering real-time data, advanced analytics, and simplified portfolio tracking. The company aims to enable a full end-to-end digital onboarding and transaction ecosystem, integrated with India's digital public infrastructure. This initiative is expected to strengthen the client franchise and improve scalability, positioning the company for future growth.

International Expansion for NRI Clients

The company has passed a resolution to establish a subsidiary unit in Dubai to cater to its NRI customer base, particularly those in the UAE region. This move is aimed at providing active support and guidance for NRIs interested in investing in India, ensuring compliance with regulatory hurdles. Currently, the focus is on facilitating Indian investments rather than offering international products.

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