Neutral on Anand Rathi Wealth, target price Rs 4,200: Motilal Oswal Financial Services

Motilal Oswal Financial Services has a neutral call on Anand Rathi Wealth with a target price of Rs 4,200. The current market price of Anand Rathi Wealth is Rs 3952.05. Anand Rathi Wealth, incorporated in 1995, is a Large Cap company with a market cap of Rs 16549.13 crore, operating in the NBFC sector.

Anand Rathi Wealth. key products/revenue segments include Income From Sale Of Share & Securities for the year ending 31-Mar-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 244.21 crore, down -2.17% from last quarter Total Income of Rs 249.63 crore and up 30.41% from last year same quarter Total Income of Rs 187.26 crore. The company has reported net profit after tax of Rs 77.30 crore in latest quarter.

The company's top management includes Mr.Anand Rathi, Mr.Pradeep Navratan Gupta, Mr.Rakesh Rawal, Mr.Mohan Vasant Tanksale, Mr.Ramesh Chandak, Mr.Kishan Gopal Somani, Mrs.Sudha Pravin Navandar. Company has Khimji Kunverji & Co. LLP as its auditors. As on 30-09-2024, the company has a total of 4 Crore shares outstanding.

Investment Rationale

Anand Rathi Wealth is one of the few companies in the listed universe space that has consistently outperformed its stated guidance. For FY23/FY24, it beat its revenue guidance by 9%/14% and PAT guidance by 8%/10%. Motilal Oswal Financial Services expects ARWL to report an AUM/revenue/PAT CAGR of 26%/26%/28% during FY24-27. With a robust cash generation (Rs 8.9 billion of OCF during FY24-27E), RoE of 40%+, and a healthy balance sheet, the company's valuation is well-priced at 42x FY26E P/E. The brokerage have cut our FY25/26/27 EPS estimates by 3%/7%/6% to factor in slower AUM growth. We maintain a NEUTRAL rating on the stock with a one-year target price of Rs 4,200 (premised on 40x Sep-26E P/E).

Promoter/FII Holdings
Promoters held 47.99 per cent stake in the company as of 30-Sep-2024, while FIIs owned 5.31 per cent, DIIs 7.96 per cent.