Anand Rathi Wealth lists at 9% premium
The ₹660 crore initial public offering (IPO) was subscribed 9.78 times in the price band of ₹530-550.
Mumbai: Shares of Anand Rathi Wealth made a steady market debut on Tuesday as it listed at ₹600 per share, 9% higher from its issue price of ₹550. The stock finally closed at ₹585 on the NSE.
The non-bank wealth solutions firm’s ₹660 crore initial public offering (IPO) was subscribed 9.78 times in the price band of ₹530-550.
Ahead of the issue, Vikas Jain, analyst, Reliance Securities, said that the IPO is valued at 51 times FY21 earnings and 9.5 times FY21 book value, which are at significant premium of its listed peer IIFL Wealth Management.
“Considering the superior asset under management (AUM) book (two times of IIFL Wealth), income yield and return ratios, we believe the premium valuations are justified and the IPO is reasonably priced. However, limited gains can be expected hereon in the medium-term perspective, as incremental value accretion can be possible only with the sustainability of strong performance in ensuing quarters," Jain said.
Anand Rathi is a mutual fund distributor registered with the Association of Mutual Funds in India. It distributes mutual fund schemes managed by asset management companies and earns distribution commissions from them.
The company is currently present in 11 cities, including Mumbai, Bengaluru, New Delhi, Hyderabad, Kolkata, Chennai, Pune, Chandigarh, Jodhpur and Noida.
“Given the fundamentals and growth potential, valuation of the company looks reasonable, as at upper end of price band, the company is valued at 7.5% AUM and 18.7 times EPS (annualized FY22E). The closest listed peer IIFL Wealth has over ₹2.2 lakh crore in AUM and trading at 25x FY22E (consensus) offers healthy growth potential too," said ICICIdirect Research.
As of August, Anand Rathi’s private wealth vertical catered to 6,564 active client families. The vertical focuses on the HNI segment with AUM potential of ₹5-50 crore. The AUM of ₹30,209 crore comprises mutual fund schemes and other financial products such as bonds held by clients.
The firm’s private wealth AUM has grown at a compound annual growth rate of 22.47% from ₹18,037 crore as of 31 March 2019 to ₹29,472 crore on 31 March 2021.
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