Anand Rathi Wealth: 38% PAT growth & 38% revenue growth in Q1-25 at a PE of 68

Excellent performance in Q1-25 already in the price. Guidance for FY25 is already in the price. While ANANDRATHI is executing well and the stock price may have run ahead

Money Muscle

Jul 14, 2024

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1. Leading Private Wealth Solutions company

anandrathiwealth.in | NSE: ANANDRATHI

3rd largest non-bank sponsored mutual fund distributor in India

2. FY19-24: PAT CAGR of 31% & Revenue CAGR of 22%

3. Strong FY-24: PAT up 34% & Revenue up 35%

4. Strong Q1-25: PAT up 38% & Revenue up 38%

5. Strong and consistent return ratios

Return on Equity

Q1-25: The company also reported a robust return on equity (ROE) of 42.8% on an annualised basis.

6. FY25 Outlook: PAT growth of 24% & Revenue growth of 21%

We are confident in our future, projecting a continued growth trajectory of 20%-25%.

FY25: Guiding for a slow down in growth momentum in FY25 compared to FY24 is indicative of a very conservative guidance to create an opportunity to revise the guidance upward during the year

Revenue growth of 21%
PAT growth of 24%
Guidance will be revised only after 9 months of FY25

7. PAT growth of 38% & Revenue growth of 38% for Q1-24 at a PE of 68

8. So Wait and Watch

If I hold the stock then one may continue holding on to ANANDRATHI

Coverage of ANANDRATHI was initiated after Q2-24 results. The investment thesis has not changed after a strong Q1-24. The management has beaten its guidance for FY24 after revising its upwards during FY24 itself.

Given the 30%+ top-line & bottom-line growth rates in Q1-24 the guidance for 20-25% growth in top-line & bottom line looks conservative. One can take a quarter by quarter view on ANANDRATHI and see if it revises its guidance in the middle of FY25, the way it did in FY24
ANANDRATHI is the middle of a strong run in the business with 5 consecutive quarters of QoQ top-line and bottom-line while sustaining margins. One should continue with ANANDRATHI as long as the strong run continues.

9. Or, join the ride

If I am looking to enter ANANDRATHI then

ANANDRATHI has delivered a strong Q1-25 with PAT growth of 38% & revenue growth of 38% at PE of 68 which makes the valuations quite rich in the short term.
The strong performance in FY24 is already discounted in the price. Outlook for FY25 is already in the price at PE of 68. While the company is executing well the stock price may have run ahead of its business performance in the short term.
At a PE of 68 the margin of safety is limited in ANANDRATHI, one not so strong quarter and the stock may start looking quite expensive.
From the ANANDRATHI management’s perspective, the stock is not over valued from a longer term perspective and it has completed a buy back at a premium over the prevailing market price.

The Board of Directors has approved a proposal to buyback up to 3,70,000 Equity Shares at Rs. 4,450 per equity share for an aggregate amount not exceeding Rs. 164.65 crores, representing 0.88% of the total paid up equity share capital
Anand Rathi Wealth successfully completed a buyback of ₹164.65 crore (excluding charges and taxes) in June 2024.

Previous coverage on ANANDRATHI