Anand Rathi Wealth shares up 245% in two years; more upside left this multibagger stock?

Anand Rathi Wealth, one of best performing debutant stocks in the last two years, have delivered a decent set of numbers in the quarter ended on September 30, 2023. Analysts, tracking the stock, continue to remain positive on the stock and suggest more upside in the stock.

Anand Rathi Wealth reported a 34 per cent rise in the net profit at Rs 58 crore for the quarter ended September 30, 2023. The company had posted a profit after tax of Rs 43 crore in the year-ago period. Its total revenue surged 37 per cent to Rs 189.1 crore in the Q2FY24 from Rs 138.1 crore in the Q2FY23.

As of September 2023 period, the assets under management (AUM) of the company stood at Rs 47,957 crore, jumping 34 per cent compared to the year-ago period. The Anand Rathi Group's listed entity has also declared an interim dividend of Rs 5 per equity share.

Anand Rathi Wealth (ARWL) posted an above-expected 2QFY24 PAT of Rs 57.7 crore on 20 per cent QoQ higher trail revenues. Revenues from structured products declined marginally to Rs 119 crore. Hence, annualised blended yields slid 10 basis points (bps) QoQ 160bps with the trail revenue share, said Equirus Securities.

"It has raised its FY24 revenue and PAT guidance by 9 per cent  and 7 per cent  to Rs 720 and 220 crore, respectively.  Since 1QFY23, ARWL’s topline has consistently grown at over 30 per cent on a yoy basis and RoEs in private wealth (PW) business around 40 per cent. The company would maintain its growth momentum and pencil in a 25 per earnings CAGR over FY23-FY26E," it said.

Considering ARWL’s healthy ROE profile of more than 35 per cent, Equirus has retained 'long' rating on the stock with a March 2025 target price of Rs 2,270. However, it has cited regulatory changes hurting MF distribution commission, dependence on the group’s NBFC entity for MLD issuance, increase in RM attrition, and adverse trends in equity markets, as the key risks to the business.

Shares of Anand Rathi Wealth were listed at the bourses in December 2021 and have delivered multibagger returns to the investors from the issue price. The company issued its shares for Rs 550 apiece and the stock delivered a return of about 245 per cent to Rs 1,971.95 about a week ago. The stock was hovering around Rs 1,900 level on Monday.

The wealth management solutions provider reported a consolidated net profit of Rs 111 crore for the April-September 2023 period, increasing 34 per cent year-on-year.  Similarly, total revenue grew 35 per cent year-on-year to Rs 368 crore during the same period under review.

Shares of Anand Rathi Wealth have gained more than 25 per cent in the last one month, while the stock has rallied about 115 per cent in the last six months. The stock has surged more than 160 per cent in the last one year's period, the data suggests, and it is up 220 per cent since its Dalal Street listing.

Anand Rathi has a total of 300 regional managers (RM) base. Each RM manages 30 clients currently, which is 50 per cent. of their capacity. Each RM can manage 50 clients. This will enable them to increase their client base, which in turn will help in business growth, said Arihant Capital Markets in its recent note.

"The company has a strong business model and has clearly defined goals. Their primary focus is on the HNI segment with a return objective of 10-15 per cent and a business growth objective of 10-25 per cent," it added without rating the stock.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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