Anand Rathi Wealth Q1-26 Results: Profit Up 28%, Record Net Inflows; FY26 Guidance on Track

Jul 10, 2025

1. Wealth Management Firm

rathi.com | NSE: ANANDRATHI

Strong Profit Growth
- PAT rose 28%. PAT Margin improved, reflecting margin discipline and efficiency.
Surging AUM
- AUM grew 27.2% YoY to ₹87,797 Cr — already 88% of FY26 target in Q1.
- Driven by both net inflows and market gains, especially in structured products (+42%).
Operating Leverage: Revenue grew 15.8%, but PBT grew 27.6%, indicating cost control and expanding operating margin
Robust SIP and Net Flows
- Monthly SIP Inflows: ₹382.5 Cr (↑14%)
- Net Inflows: ₹7,500 Cr (↑50% YoY)
Improved RM Productivity
- AUM per Relationship Manager: ₹32 Cr (↑10% YoY)
- Client Families per RM: also up — more business per advisor

Slower Growth in Distribution Income
- Distribution of financial products grew only 8.3% YoY, much slower than other verticals like MF (+27%) or “Others” (+31%).
Rising Cost Base
- Other Expenses up 14.3%, — should be monitored if the trend continues.
- Still manageable, but room for more operating leverage.
Digital Wealth Business – Early Stage
- Digital AUM at ₹2,055 Cr vs core AUM of ₹87,797 Cr.
- Still <3% of total AUM despite push — needs stronger execution.
Employee Cost Growth
- While YoY employee cost rise was moderate (5.6%), future scalability depends on managing this while increasing RM productivity further.

Big Beat on Profitability & AUM. Slight lag in distribution growth and cost control, but overall Q1-26 is a solid execution win.

Anand Rathi is compounding wealth efficiently without heavy reinvestment or leverage

Management commentary after Q1-25 Results: We are confident of achieving our guidance.

Current TTM P/E: 55.3× — significantly above long-term average for wealth firms.
Forward FY26 P/E: 47× (PAT = ₹375 Cr) — still pricing in strong earnings momentum.
At ~47× forward P/E, the current valuation assumes ~25% PAT CAGR beyond FY26.
To justify or expand this valuation, Anand Rathi must:
- Beat ₹375 Cr PAT in FY26
- Compound earnings toward ₹600–650 Cr by FY29
- Scale tech and maintain high RoE (>40%)
Anand Rathi Wealth looks overvalued at 55× P/E, unless it can beat FY26 PAT guidance or re-rate on AUM scale/tech execution.
- Therefore, market is pricing in future earnings growth ~25% CAGR for at least 3–4 years

High Quality Compounding: 5-year PAT CAGR > 30%, RoE > 40%, PAT margin > 30% — rare combo
Asset-Light Model: Scalable without heavy capital; RM productivity still improving
Under-penetrated Market: India’s wealth industry (esp. HNI/UHNI) growing at 15–17% CAGR
Sticky Client Base: 79% AUM >3 yrs old, attrition near zero — recurring, predictable revenue
Optionality: Digital Wealth + OFA platforms still small but could unlock growth
Strong Earnings Visibility FY26 PAT guidance of ₹375 Cr is achievable; could exceed if net inflows stay high

If PAT compounds at ~25% CAGR beyond FY26, current price may still deliver decent upside over 3-4 years.

Rich Valuation P/E ~55x TTM, ~47x FY26E — very high; leaves no room for disappointment
Growth Already Priced In Market is assuming >25% PAT CAGR for next 3-4 years
Slow Distribution Growth Only 8.3% YoY in Q1 — flattish trend in a core vertical
Tech Platform Scale-up Slow Digital AUM & OFA still contribute <3% — limited near-term impact
Valuation Compression Risk If AUM growth moderates or PAT misses guidance, stock could de-rate

📌 Even a small growth miss or market correction could compress the multiple — downside risk from re-rating.

Opportunity: Top-tier compounding business in a booming industry with strong fundamentals and optionality
Risk: Fully priced, and even small growth or margin disappointments could hurt returns