Anand Rathi Wealth Limited – Are you riding the wave of growth?

Anand Rathi Wealth Limited: Amidst the dynamic changes taking place in the wealth management sector in India, Anand Rathi Wealth Limited (ARWL) shines with its personal touch and commitment to client success. Starting as a stockbroker, ARWL has grown into a well-rounded organization helping wealthy individuals and families achieve financial freedom.

ARWL stock delivered a stellar 233% return in just one year. Third quarter fiscal 2024 results showed a positive outlook for the company, with total revenue up 34% year-over-year and assets under management (AUM) up 43% year-over-year.

In this article, we will take a look at Anand Rathi Wealth Limited’s operations and explore its special position within the industry, its financial strength, and the reasons for its growth in India’s vibrant wealth management scene.

Understanding the Indian Wealth Management Industry

India’s wealth management market is experiencing a dynamic boom, driven by economic prosperity, rising disposable income, and growing population of high-net-worth individuals (HNWIs). As of 2023, the industry boasts a whopping assets under management (AUM) of over Rs 39.4 lakh crore and is expected to continue to exhibit double-digit growth in the coming years.

Investment in equity mutual funds increased from 6.7% in FY18 to 15.2% in FY23. India’s HNI population has grown at a compound annual growth rate (CAGR) of 21% from 2017 to 2022.

The number of taxpayers with income above Rs. $100 million grew 15% from FY18 to FY23. Indian households have a significant share of financial assets, with around 63% invested in low but guaranteed returns such as deposits, small savings, pensions and provident funds. Additionally, approximately 9% of financial assets are held in cash, generating no returns.

These economic changes provide tremendous opportunities for players like ARWL to thrive.

business overview

Established in 2002, Anand Rathi Wealth Limited (ARWL) started its operations as an AMFI registered mutual fund distributor. It has since transformed into a prominent non-bank sponsored wealth solutions provider specializing in servicing high and ultra-high net worth individuals (HNIs and UHNIs) in India.

ARWL differentiates itself with its diverse AUM strategy. The company excels in the private equity segment of HNWIs with a minimum investment of Rs 5 crore and also serves individual investors through its mutual fund distribution arm. This dual approach expands ARWL’s market reach, creating a resilient portfolio.

ARWL also strategically segments its clients to provide tailored solutions based on their individual risk preferences, investment objectives and life stages. This personalized touch fosters trust and builds long-term relationships, a critical advantage in a competitive wealth management environment. The company’s assets under management increased by 43% year-on-year from Rs 38,517 billion in CY22 to Rs 55,057 billion in CY23.

Let’s understand the company’s product AUM mix for CY23

Source: Investor briefing session report

According to the company report, the company recorded the highest AUM in equity MFs at 52%, followed by non-principal structured products at 24%.

Client Segmentation

Anand Rathi Wealth Limited leverages a data-driven approach to gain superior market insights and implement customer segmentation strategies aimed at creating real value.

Source: Investor briefing session report

About 51.9% of the company’s clients have investable assets in the range of Rs 5 Crores to Rs 50 Crores, demonstrating its strong foothold in the segment. Additionally, over 22.4% of its assets under management (AUM) comes from customers worth over Rs 50 Crores.

Additionally, nearly 25.7% of clients fall into the Rs 0.5 crores to Rs 5 crores category compared to 31.6% in CY22. Some of them are in the process of allocating their entire portfolio to the company.

The company has experienced significant growth in the ultra-high net worth individuals (UHNI) segment. According to the company, these individuals were primarily High Net Worth Individuals (HNIs) when they first joined, and have since evolved into UHNIs over time.

A tour of the company’s financials

In fiscal 2022-23, the company achieved a total revenue of Rs 558 million, a significant growth of 31 per cent compared to Rs 425 million in the previous fiscal. Profit after tax (PAT) also showed impressive growth, reaching Rs 169 Crores, a significant increase of 33% compared to Rs 127 Crores in the previous year.

Additionally, the company maintained strong client addition momentum, adding approximately 1,270 client families during fiscal 2022-23. In terms of Relationship Managers (RMs), the company achieved a net increase of 22 new RMs over the same period.

The company’s debt to equity ratio decreased by 50% from 0.07 in FY22 to 0.03 in FY23. The decline is due to debt repayment of Rs 833 crores in 2022-23.

What sets them apart?

The company’s strong market presence is attributed to its effective partner-led distribution model where independent financial advisors (IFAs) and AMFI registered mutual fund dealers leverage Anand Rathi’s expertise and skills.

This has expanded the company’s market reach to cater specifically to the growing HNI segment through simplified and standardized services provided by a team of private wealth experts known as RMs.

The company excels in distributing financial products, with emphasis on the HNI segment through a mix of mutual funds and Non-PP Structured Products (Non-PP SP) for predictable returns with lower risk. The company also provides holistic services such as estate planning and succession planning at no cost to clients.

Future outlook: Riding the wave of growth

The company expects a promising future amidst the solid performance of Indian equities, driven by strong economic growth, corporate profits and increased investments from foreign and domestic sources. Despite potential near-term volatility, the medium- to long-term outlook for Indian equity markets remains attractive.

The wealth management industry is thriving due to changing demographics, the emergence of a new generation of investors, global transformation, and widespread digitalization.

ARWL’s strategy focuses on providing property solutions with a long-term perspective that have proven effective in achieving client objectives during market fluctuations. The company is optimistic that its strategy will continue to help customers achieve their goals.

Our roadmap for strong long-term growth includes penetrating our existing customer fleet, growing wallet share, acquiring new customers and relationship managers, and generating return on investment to add to our Assets Under Management (AUM). ARWL aims to achieve a growth rate of more than 20% based on these growth engines.

There is significant potential in the equity mutual fund market in the future. Forecasts indicate a compound annual growth rate (CAGR) of 17.8% by FY27. Additionally, the total number of High Net Worth Individuals (HNIs) is expected to grow at a compound annual growth rate (CAGR) of 14.9% by FY27.

conclusion

In the dynamic landscape of wealth management in India, Anand Rathi Wealth Limited (ARWL) has emerged as a beacon of success, demonstrating its remarkable journey from stock broking to a powerhouse in wealth solutions.

The Company’s outstanding financial performance, solid customer-centric approach, and strategic market positioning demonstrate the Company’s ability to navigate an evolving industry. With its focus on personalized services, innovative products and commitment to long-term growth, ARWL is well-positioned for continued success in India’s thriving wealth management ecosystem.

Your opinion matters! If you enjoyed exploring ARWL’s success story and wealth management environment, please share your thoughts below. Let us know in the comments!

Written by Akshita Malu

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