Ruchit Jain
Sachin Gupta
Tanushree JaiswalIndian Emulsifier IPO Allotmen...
by
Tanushree Jaiswal
17/05/2024
IPO
Anand Rathi Wealth IPO - Information Note
5paisa Research Team
13th December 2022 - 06:26 am
Anand Rathi Wealth is a non-banking wealth management group that is affiliated to the Anand Rathi financial services business. Its focus has been largely on leveraging technology in both its verticals viz. Omni Wealth and Digital Wealth.
Anand Rathi Wealth had acquired the wealth management business of Religare Wealth in the year 2017.
As of August 2021, Anand Rathi Wealth manages a wealth AUM / AUA of over Rs.30,000 crore. It is one of the leading wealth advisors to the HNI clientele in the mutual funds advisory space.
It manages over 6,564 active client families with a team of over 233 relationship wealth managers. Anand Rathi Wealth largely focuses on the fast growing neo-affluent segment.
Key terms of the Anand Rathi Wealth IPO issues
|
Key IPO Details |
Particulars |
Key IPO Dates |
Particulars |
|
Nature of issue |
Book Building |
Issue Opens on |
02-Dec-2021 |
|
Face value of share |
Rs.5 per share |
Issue Closes on |
06-Dec-2021 |
|
IPO Price Band |
Rs.530 - Rs.550 |
Basis of Allotment date |
09-Dec-2021 |
|
Market Lot |
27 shares |
Refund Initiation date |
10-Dec-2021 |
|
Retail Investment limit |
13 Lots (351 shares) |
Credit to Demat |
13-Dec-2021 |
|
Retail limit - Value |
Rs.193,050 |
IPO Listing date |
14-Dec-2021 |
|
Fresh Issue Size |
Nil |
Pre issue promoter stake |
74.74% |
|
Offer for Sale Size |
Rs.660 crore |
Post issue promoters |
50.62% |
|
Total IPO Size |
Rs.660 crore |
Indicative valuation |
Rs.2,289 crore |
|
Listing on |
BSE, NSE |
HNI Quota |
15% |
|
QIB Quota |
50% |
Retail Quota |
35% |
Data Source: IPO Filings
Here are some of the key merits of the Anand Rathi Wealth business model
1) Anand Rathi Wealth has tweaked its wealth management model to be technology savvy with a sharp omni-channel and digital focus.
2) For a wealth management company with AUM of over Rs.30,000 crore, the overall company valuation is just Rs.2,289 crore on indicative IPO upper band pricing.
3) The AUM and AUA does place Anand Rathi Wealth among the leading non-bank wealth advisors in India with substantial growing wealth franchise.
4) Anand Rathi Wealth has emerged among the top 3 mutual fund distributors and is likely to gain from the growth in the overall mutual fund AUM universe in India.
5) The company has solid financials in terms of revenue, AUM and assets growth, although FY2021 was an exception due to the lag effect of the pandemic.
6) The intent is to list the stock and get a better indicative valuation for the wealth franchise in the coming years
How is the Anand Rathi Wealth IPO structured?
The Anand Rathi Wealth IPO is a total offer for sale (OFS) and here is the gist of the offer
i) The OFS component will comprise the issue of 1,20,00,000 shares and at the upper price band of Rs.550, OFS value works out to Rs.660 crore.
ii) Out of the OFS of 120.00 lakh shares, promoters Anand Rathi, Pradeep Gupta and Anand Rathi Financial Services Ltd will sell will sell 3.75 lakh shares, 3.75 lakh shares and 92.85 lakh shares respectively. Balance shares will be sold by other investors.
iii) Post the offer for sale and the fresh issue, the promoter stake will come down from 74.74% to 50.62%. Public shareholding post-IPO will stand enhanced to 49.38%.
There will be no fresh funds coming into the company. The public issue is to give partial exit to promoters and early investors and to get the stock listed.
Key Financial parameters of Anand Rathi Wealth
|
Financial Parameters |
Fiscal 2020-21 |
Fiscal 2019-20 |
Fiscal 2018-19 |
|
Sales Revenues |
Rs.279.25 cr |
Rs.336.41 cr |
Rs.284.19 cr |
|
Employee Costs |
Rs.150.76 cr |
Rs.166.57 cr |
Rs.132.17 cr |
|
Net Profit / (Loss) |
Rs.45.07 cr |
Rs.61.38 cr |
Rs.59.21 cr |
|
Diluted Earnings per share (EPS) |
Rs.10.85 |
Rs.14.95 |
Rs.14.40 |
|
Net Profit Margins (NPM) |
16.14% |
18.25% |
20.83% |
|
Employee cost ratio |
53.99% |
49.51% |
46.51% |
Data Source: Company RHP
Even if you factor for the COVID impact in FY21, Anand Rathi Wealth has a challenge in keeping manpower costs in check. That has consistently put pressure on the net margins of Anand Rathi Wealth and clearly, there is a challenge to boost the profit per employee, especially when you cater to the neo wealth segment.
Anand Rathi Wealth is expected to have a listing market cap of Rs.2,289 crore assigning a P/E ratio 51X on FY21 earnings. Assuming that FY22 sees reversal to median profits of pre-COVID period, the price will look more reasonable at 38X.
Investment Perspective for Anand Rathi Wealth IPO
Here is what investors must consider before investing in the Anand Rathi Wealth IPO.
a) With over Rs.30,000 crore of AUM and AUA combined, it gives a good exposure to the fast growing wealth management franchise in India.
b) Wealth management is likely to benefit from the rapid growth in equity cult and the mutual fund cult in India, as is evident from AMFI and NSDL data.
c) A digitally driven wealth advisory model is likely to be value accretive in the sense that it would enable scaling up without too much additional costs.
d) The company has strong and loyal customer franchise, especially in mutual fund advisory, which has stood in good stead.
e) Valuations are reasonable if you look at the wealth management franchise as a share of market cap to wealth AUM/AUA.
The challenge for the company is to revive its pre-COVID growth without letting costs soar. This will remain a challenge and also a risk factor. The franchise is good but it comes with inherent risks for the IPO investor.
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