Release Date: April 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anand Rathi Wealth Ltd (BOM:543415, Financial) reported a 30% year-on-year growth in consolidated revenue, reaching INR 2,981 crore.
- Profit after tax increased by 33% year-on-year, surpassing revised guidance and ending at INR 301 crore.
- The company's total Assets Under Management (AUM) grew by 30% year-on-year to INR 77,103 crore.
- The share of equity mutual funds in AUM rose to 53% as of March 2025, compared to 51% in March 2024.
- The company recorded a 76% year-on-year growth in net flow, achieving INR 12,617 crore in net mobilization despite challenging market conditions.
Negative Points
- The company faces challenges in maintaining consistent growth amidst market volatility, as highlighted by the need for market-agnostic results.
- There is a concern about the sustainability of operating leverage, with management indicating limited short-term operating leverage.
- The structured product revenue growth of 15-17% lagged behind the 50% increase in structured product AUM, indicating potential yield moderation.
- The company is in the process of expanding internationally, but obtaining necessary licenses, such as in the UK, could take 4-6 months, delaying operational activities.
- The company has not yet made significant progress in leveraging the tax benefits of the Gift City for NRI clients, which could enhance profitability.
Q & A Highlights
Q: How is Anand Rathi Wealth Ltd positioning structured products given the current market scenario, and what is the strategy around mutual fund distribution? Additionally, what are the plans for the UK subsidiary and RM team expansion?
A: Structured products are easier for clients to accept during volatile markets. All 147 products matured last year delivered maximum returns. The UK subsidiary is a step towards expanding offshore business, with operations expected to start after obtaining necessary licenses. The company plans to add 50-60 RMs this year, with a focus on nurturing internal talent.
Q: What is the reason for the increase in other income this quarter, and how does the company plan to achieve the operating leverage implied in the FY26 guidance?
A: The increase in other income is due to higher surplus deployment in fixed deposits and changes in fair value of long-term investments. The company focuses on reinvesting in business areas like technology and operations to achieve long-term consistency rather than short-term operating leverage.
Q: What are the expectations for structured product maturities in FY26, and how does the company view the specialized investment fund product launched by AMCs?
A: Structured product maturities are expected to be between 4,000 to 5,000 crores. The company is skeptical about the specialized investment fund product taking off due to limited leverage flexibility, which may not attract significant movement from derivative spaces.
Q: Can you explain the structured product strategy and how it is managed in volatile markets?
A: Structured products are based on the Black-Scholes pricing model, involving debt instruments and derivatives. The issuer hedges the book's delta, gamma, theta, and vega to manage volatility. The company plans to conduct a detailed session to explain structured products to interested parties.
Q: What is the total addressable market (TAM) for Anand Rathi Wealth Ltd's products, and how is the portfolio allocation structured?
A: The company creates its market, with structured products accounting for 25-35% of client portfolios. Portfolio allocations vary between 45-65% in long-only equity, depending on the client's life stage and investment goals.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
