ANANDRATHI

(ARWL) reported operating revenue of INR2.2b in 4QFY25, up 20% YoY (4% miss). Overall revenue growth was driven by a strong 28% YoY growth in the MF business revenue, which reached INR1b. For FY25, overall revenue from operations grew 30% YoY to INR9.4b. Opex grew 18% YoY to ~INR1.3b (flat sequentially), driven by 20% YoY growth in employee costs to INR1b. Other expenses grew 11% YoY to INR300m. PAT for the quarter stood at INR737m, reflecting a 30% YoY growth (5% beat on estimates). For FY25, PAT rose 33% YoY to INR3b. PAT margins for 4QFY25 expanded 237bp YoY to 33.2%. (MOFSLe at 30.5%). For FY26, management has guided for Revenue/PAT/AUM of INR11.75b/INR3.75b/INR1t, respectively. We expect ARWL to report an AUM/revenue/PAT CAGR of 20%/18%/20% during FY25-27, with a robust cash generation (INR8.4b of OCF during FY25-27E), an RoE of 38%+, and a healthy balance sheet. However, we believe the company is fairly valued at 34.9x FY27E P/E. We reiterate a NEUTRAL rating with a one-year TP of INR1,900 (premised on 36x Mar’27E P/E).