Anand Rathi Wealth Limited: In the dynamic change happening in India’s wealth management, one company shines for its personal touch and dedication to client success: Anand Rathi Wealth Limited (ARWL). Starting as a stockbroker, ARWL has grown into a versatile force, helping wealthy individuals and families achieve financial freedom.

ARWL stock gave a stellar return of 233% in just one year. The Q3FY24 results displayed a positive outlook for the company with a 34% YoY increase in Total Revenue and 43% YoY in their assets under management (AUM).

In this article, we’ll explore Anand Rathi Wealth Limited’s operations, looking at its special place in the industry, its financial strength, and the reasons behind its growth in India’s lively wealth management scene.

Understanding the Indian Wealth Management Industry

India’s wealth management market is experiencing a dynamic boom, spurred by a thriving economy, rising disposable incomes, and a thriving high net-worth Individuals(HNWI) population. As of 2023, the industry boasts a staggering AUM (assets under management) of over Rs 39.4 lakh crore, with projections indicating consistent double-digit growth in the coming years.

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There has been an increase in the amount of investments in the Equity Mutual fund, i.e. from 6.7% in FY18 to 15.2% in FY23. The HNI population in India has grown at a Compound annual growth rate(CAGR) of 21% from 2017 to 2022. 

The number of taxpayers having an income of > Rs. 1 crore, saw a growth of 15% from FY18 to FY23. Indian households show a significant allocation, with around 63% of their financial assets invested in low but guaranteed return assets like deposits, small savings, and pension and provident funds. Additionally, approximately 9% of their financial assets are held in cash, providing no return.

These changes in the economy present immense opportunities for players like ARWL to flourish.

Business Overview

Established in 2002, Anand Rathi Wealth Limited (ARWL) commenced operations as an AMFI-registered Mutual Fund Distributor. Since then, it has transformed into a prominent non-bank-sponsored wealth solutions provider, specializing in serving high and ultra-high-net-worth individuals (HNIs and UHNIs) in India.

ARWL sets itself apart with a diversified AUM strategy. While excelling in private wealth for HNWIs, with a minimum investment of Rs 5 crores, the company also caters to individual investors through its mutual fund distribution arm. This dual approach broadens ARWL’s market reach, creating a resilient portfolio.

Moreover, ARWL strategically segments its clientele, providing tailor-made solutions based on individual risk preferences, investment objectives, and life stages. This personalized touch fosters trust and establishes long-term relationships, a crucial advantage in the competitive wealth management landscape. The company saw a growth in their Assets under Management by 43% YoY from Rs 38,517 crores in CY22 to Rs 55,057 crores in CY23.

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

Anand Rathi Wealth Limited - Investor presentation report

Source: Investor presentation report

According to the company’s report, the company recorded the highest AUM  under the Equity MF of 52% followed by Non-Principle Structured products with 24%. 

Client Segmentation

Anand Rathi Wealth Limited utilizes a data-driven approach to derive superior market insights and implement client segmentation strategies aimed at creating substantial value. 

MetricCY23CY22
Rs 50 Crores and above22.4%16.6%
Rs 5 Crores – Rs 50Crores51.9%51.8%
Rs 0.5 Crores – Rs 5Crores25.7%31.6%

Source: Investor presentation report

Approximately 51.9% of the company’s clients possess investable assets within the Rs 5 Crores to Rs 50 Crores range, showcasing a strong foothold in this segment. Moreover, over 22.4% of the Assets Under Management (AUM) originate from clients above  Rs 50 Crores.

 Additionally, nearly 25.7% of clients fall under the  Rs 0.5 crores to  Rs 5 crores category as compared to 31.6% in CY22. in which a portion of them is in the process of allocating their entire portfolio to the company.

The company has experienced substantial growth in the Ultra High Net Worth Individuals (UHNIs) category. According to the company, these individuals were primarily High Net Worth Individuals (HNIs) when they initially joined and have since progressed to become UHNIs over time.

Financial Walkthrough of the company

In the fiscal year 2022-23, the company achieved a total revenue of Rs 558 Crores, marking a significant growth of 31% from Rs 425 Crores in the previous fiscal year. The Profit After Tax (PAT) also witnessed impressive growth, reaching Rs 169 Crores, indicating a substantial increase of 33% compared to Rs 127 Crores in the previous year.

Furthermore, the company sustained robust momentum in client additions, adding approximately 1,270 client families during the fiscal year 2022-23. In terms of Relationship Managers (RMs), the company successfully added 22 new RMs on a net basis within the same period.

The company’s Debt to Equity ratio reduced by 50% from 0.07 in FY22 to 0.03 in FY23. The decrease was because of the repayment of debt during the year 2022-23 of Rs 8.33 crores.

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 Distributors leverage Anand Rathi’s expertise and technology.

This has expanded the company’s market reach, particularly in catering to the growing HNI segment through a simplified, standardized offering delivered by a team of private wealth professionals known as RMs.

The company excels in distributing financial products, emphasizing the HNI segment with a mix of mutual funds and Non-PP Structured Products (Non-PP SPs) for predictable returns with lower risk. The company also provides holistic services like estate planning and succession planning without charging clients.

Future Outlook: Riding the Wave of Growth

The firm anticipates a promising future amid the robust performance of Indian equities, fueled by strong economic growth, corporate earnings, and increased investment from both foreign and domestic sources. Despite potential short-term volatility, the mid-term and long-term outlook for the Indian equity market remains attractive.  The wealth management industry is thriving due to changing demographics, the emergence of new-generation investors, global transitions, and widespread digitization.

ARWL’s strategy focuses on offering wealth solutions from a long-term perspective, proven effective in achieving client objectives during market fluctuations. The company is optimistic that its strategies will continue to support clients in reaching their goals. 

The roadmap for strong long-term growth includes penetrating existing client families, expanding wallet share, acquiring new clients and relationship managers, and generating returns on investments to add to Assets Under Management (AUM). With these growth engines, ARWL aims to achieve a growth rate of 20% or more.

The future holds significant potential for the Equity mutual fund market. Projections indicate a Compound Annual Growth Rate (CAGR) of 17.8% by FY27. Additionally, the total count of High Net Worth Individuals (HNIs) is anticipated to increase at a CAGR of 14.9% by FY27.

Conclusion

In the dynamic landscape of India’s wealth management, Anand Rathi Wealth Limited (ARWL) emerges as a beacon of success, exemplifying a remarkable journey from stock brokerage to a powerhouse in wealth solutions. 

The company’s stellar financial performance, robust client-centric approach, and strategic market positioning showcase its prowess in navigating the evolving industry. With a focus on personalized service, innovative offerings, and a commitment to long-term growth, ARWL stands poised for continued success in India’s flourishing wealth management ecosystem.

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

Written by Akshita Maloo

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