Anand Rathi brings second IPO after delivering 1,000% return from wealth business. Can the goodwill work? – News Air Insight

When Anand Rathi Wealth listed on the stock exchanges in December 2021, few could have predicted the spectacular journey it was about to embark on. The wealth management company, a part of the diversified Anand Rathi Group, has since delivered a nearly 1,000% return to investors, turning every Rs 10,000 invested into Rs 1 lakh in less than four years. The rally has now set the stage for the group’s next market outing — Anand Rathi Share and Stock Brokers.

Wealth business story

The wealth arm’s growth was driven by consistent business expansion and strong financials. From FY21 to FY25, Anand Rathi Wealth’s revenues grew at a CAGR of 37% to Rs 981 crore, while assets under management (AUM) expanded at 30% CAGR to Rs 77,103 crore.

Profitability surged too, with return on equity touching 44.6% in FY25 — the highest in the last five years, up from just 20.9% in FY21. This made sure the company’s market value jumped from just Rs 2,300 crore at the time of IPO to around Rs 25,000 crore currently.

Analysts at Almondz Global estimate the company is on track to hit Rs 375 crore in profit this fiscal, reflecting a 25% growth trajectory.

SimranJeet Singh Bhatia, Senior Research Analyst at Almondz Global, said, “Anand Rathi Wealth has demonstrated industry-leading growth, with consistent improvement in margins and returns. With India’s wealth creation spreading from metros to Tier II cities, the company is strongly positioned to tap the expanding market.”

The stock currently trades at a rich valuation of nearly 79x FY26 earnings, but the track record continues to highlight investor confidence.

The new IPO bet

On September 23, the group will test investor appetite again with the launch of Anand Rathi Share and Stock Brokers’ Rs 745 crore IPO. The issue, priced in the range of Rs 393–414 per share, is entirely fresh and will be used primarily to shore up working capital (Rs 550 crore) and meet general corporate needs.

The brokerage arm, with over three decades of legacy, has carved a niche in full-service broking. Its FY25 revenue rose 24% to Rs 846 crore, while net profit jumped 34% to Rs 104 crore.

Margins remain healthy, with EBITDA at 36.8% and PAT at 12.2%. Return ratios are strong too, with ROE at 23.1% and ROCE at 21.3%.

According to Vaibhav Vidwani, Research Analyst at Bonanza, the company also leads peers in average revenue per customer, thanks to its margin trading facility and diversified revenue streams. “With strong management, robust digital capabilities, and attractive IPO pricing at 25x post-issue earnings, Anand Rathi Share’s IPO looks promising,” he said.

Can history repeat?

The big question for investors is whether the group’s brokerage IPO can mirror the wealth arm’s extraordinary performance.

Analysts caution that while fundamentals are strong, external risks remain. The brokerage industry is highly competitive, with regulatory changes often altering growth trajectories. The stock’s long-term journey will depend on how effectively the company scales up digitally and defends its market share.

Still, the brand equity built by Anand Rathi Wealth’s rally is hard to ignore. Investors who watched the wealth arm’s rise from a midcap to a market star will likely be keen to participate in the group’s next act.

With a proven track record of scaling businesses and a supportive industry backdrop of rising financialisation in India, Anand Rathi Share’s IPO enters the market at an opportune time. Whether it delivers another fairy tale may take years to answer, but the buzz around the IPO suggests the Street may well give it the benefit of doubt.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)