SEBI Rejects Draft IPO Filing of Anand Rathi Share and Stock Brokers

On Monday, the Securities and Exchange Board of India (SEBI) returned the draft papers for the public issue of Anand Rathi Share and Stock Brokers Ltd. According to an update with the regulator, the brokerage arm of the Anand Rathi Group had intended to raise ₹745 crore through a fresh issue of shares. 

Although the company submitted its Draft Red Herring Prospectus (DRHP) to SEBI in mid-December, the regulator returned the documents on January 17, about a month later, without citing any specific reason.

Anand Rathi Share and Stock Brokers, which operates an extensive network across India, was also exploring a pre-IPO funding round to generate ₹149 crore. The IPO’s book-running lead managers included Nuvama Wealth Management, DAM Capital Advisors, and Anand Rathi Advisors.

Had the IPO proceeded as planned, approximately ₹550 crore would have been allocated for long-term working capital and general corporate purposes. Additionally, the company’s shares were set to be listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). The draft red herring prospectus also indicated that one-third of the issue was reserved for eligible employees.

The company had further intended to secure ₹149 crore through a pre-IPO placement, which would have consequently reduced the overall issue size. Anand Rathi Share and Stock Brokers offers a diverse range of financial services, including broking, margin trading, and financial product distribution. 

Its clientele includes not only retail investors but also high-net-worth individuals (HNIs), ultra-HNIs, and institutional clients. As of September 30, 2024, 85% of its active client base—approximately 1.46 lakh individuals—were over the age of 30. Operating through 90 branches in 54 cities across India, the firm has 1,123 authorized agents working in 333 cities.

The company’s operational revenue saw a significant 46% increase, reaching ₹682 crore in the financial year 2023-24, compared to ₹468 crore in FY23. Meanwhile, profit after tax nearly doubled, rising from ₹37.7 crore in FY23 to ₹77.3 crore in FY24. For the six-month period ending September 30, 2024, revenue from operations stood at ₹441.72 crore, with profit after tax amounting to ₹63.66 crore.