ANANDRATHI

Sustains 20%+ PAT Growth

delivered another strong quarter in Q4FY26, marking its 18th consecutive quarter of 20%+ profit growth—a rarity among Nifty 500 companies. Despite this, the stock remained muted immediately after results, reflecting the structural reality that over half of its assets under management (AUM) are tied to equity mutual funds, making earnings partly dependent on market sentiment. AUM guidance was missed during the March equity sell-off but crossed the ₹1 trillion milestone just ahead of the earnings release, triggering an 18% rally in April. Operational Highlights Net inflows: slipped to ₹3,379 crore in Q4FY26 amid a 14% fall in the Nifty 50. AUM milestone: crossed ₹1 trillion after the ceasefire-led market recovery. Relationship managers (RMs): ~400, supporting growth with limited hiring. AUM per RM: rose to ₹226 crore (vs. ₹198 crore last year). Margins: net profit margin expanded to 32.2% in FY26 (vs. 30.7% in FY25). PAT: up 28% YoY to ₹386 crore in FY26. Industry Context Indian mutual fund AUM compounded at ~19% CAGR (Mar 2019–Feb 2026). Equity AUM-to-GDP ratio at 10.3%, far below global average of 38.3%, indicating a long runway for financialization-led growth. Anand Rathi’s share of equity MF inflows expanded from 0.18% in FY20 to 2.4% in 9MFY26, reflecting strong execution and client acquisition. Outlook & Valuation Management targets ₹460 crore PAT in FY27 with AUM of ₹1.2 trillion. Stock trades at 63x FY27E earnings (Bloomberg consensus), suggesting sustained execution is already priced in. Key monitorable: whether operating leverage continues to offset market cyclicality, given reliance on equity MF flows. Conclusion Anand Rathi Wealth exemplifies a scalable operating-leverage model, consistently delivering PAT growth and expanding margins. While valuations are demanding, the firm’s ability to gain market share and leverage India’s underpenetrated financialization story provides long-term growth visibility.