Anand Rathi Wealth

Anand Rathi Wealth Management (ARWL) stands out in the wealth management industry. It has a strong competitive moat compared to its listed peers like 360 One WAM and Nuvama Wealth Management.

While others have struggled to surpass the 20% ROCE (Return on Capital Employed) threshold, ARWL has consistently delivered impressive figures.

• With a current ROCE of 54%, it has a historical performance of over 48%, except during FY2020-21.

This consistent outperformance highlights ARWL’s superior operational efficiency and competitive edge in the wealth management space.

From Q1 FY24 to Q1 FY25, the company’s ROE was around 40% odd levels (the Annualised Return on Equity is 42.8% for Q1 FY25). The company is confident in maintaining current ROE levels, driven by sound capital management and growth strategies.

(Image Source: Finology Ticker)

Here is ARWL’s recent highlight:

• Consolidated total revenues reached ₹245 crore in Q1 FY25, reflecting a 38% growth compared to ₹178 crore in Q1 FY24.
• Profit after tax (PAT) was ₹73 crore, marking a 38% increase from ₹53 crore in the same quarter last year.
• PAT margin for Q1 FY25 stood at 29.9%.
• The client attrition rate in terms of AUM loss was maintained at only 0.1%, showcasing a strong client-centric approach.
• The RM (Relationship Manager) attrition rate has been 0% in the last four quarters, which helps lower client attrition.
• Exploring potential growth into the NRI segment due to increasing global interest in Indian investments.
• Emphasises wealth management services like estate planning and will creation, free of charge, with a focus on client protection.

(Image Source: Company’s Presentation)

Improvement in key operational metrics and analysis of future growth:

• 52 relationship managers were added in the past 12 months, bringing the total to 360.
  • Aims to improve RM productivity by reallocating smaller clients to apprentice RMs and optimising the management of 50 clients per RM.
  • Clients per RM saw a marginal increase from 28 in June 2023 to 29 in June 2024.
  • This slight rise indicates that the firm has maintained a balanced approach to client servicing.
  • Rather than overloading RMs with clients, the company appears to focus on deepening relationships with a manageable number of clients.
• Active client families increased by 19% year-on-year, surpassing 10,000.
  • Focuses on client referrals and word-of-mouth to drive new client acquisition and organise events to attract clients through existing networks.
  • Emphasises developing relationships with clients who are open to referring friends and family.
  • Exploring expansion opportunities in the NRI segment and regions like GIFT City.
• AUM per relationship manager increased from ₹137 crore in June 2023 to ₹187 crore in June 2024, a significant jump.
  • It suggests that RMs are becoming more efficient in managing larger portfolios.
  • This could indicate that the company’s efforts to upskill its RMs’ capacity and productivity are bearing fruit.
  • Such improvements in RM productivity are vital for sustaining long-term bottom-line growth.

(Image Source: Company’s Presentation)

What do you think about the company’s future?