Anand Rathi IPO Analysis – Should you invest or avoid?
Anand Rathi IPO (Anand Rathi Wealth Limited IPO) Details
Mumbai based Anand Rathi Wealth Limited is coming up with an IPO that would open for subscription on 2nd December 2021. Anand Rathi Wealth Limited is one of the leading non-bank wealth solution firms in India. It posted stable revenues in the last 3 years. Should you invest in Anand Rathi IPO? Is the share price reasonably priced or overpriced? We would have 360 degree review of fundamentals and technical analysis in this article.
About Anand Rathi Wealth Limited
Anand Rathi Wealth Limited is one of the leading non-bank wealth solutions firms in India.
It is ranked amongst the top 3 non-bank mutual fund distributors in the country. It offers wide product portfolio of wealth solutions, financial product distribution and technology solutions to its customers.
It acts as mutual fund distributor (registered with AMFI). It distributes mutual fund schemes and earns distribution commissions on a trail basis from AMCs.
It also purchases non-convertible market linked debentures (MLDs) and offers them to its clients and earns income from these sales.
Company primary provides services through its private wealth vertical business segment which has AUM of Rs 294.7 Bn as of end of Aug-2021.This vertical caters to over 6,500 active clients through a team of 233 relationship managers. Beyond private wealth, it has two new age technology led business verticals i.e. Digital wealth and Omni Financial Advisors.
Company has presence across 11 cities in India.
Anand Rathi IPO details
|IPO Opening Date||02-Dec-21|
|IPO Closing Date||06-Dec-21|
|Issue Type||Book Built Issue IPO|
|Face Value||Rs 5 per equity share|
|IPO Price band||Rs 530 to Rs 550 per equity share|
|Lot Size||27 Shares|
|Min Order Quantity||27 Shares|
|Listing at||BSE and NSE|
|Issue Size||Total Rs 660 Crores
1) OFS – Rs 660 Crores
2) Fresh issue – Zero
|Employee Discount||Rs 25 per share|
What are Anand Rathi Wealth Limited strengths?
1) Company focuses on the underserved and less price sensitive HNI segment
2) It has uncomplicated, holistic and standardized solutions offered to clients based on an objective-driven approach
3) It is one of the leading non-bank mutual fund distributors in India coupled with presence in Non-Convertible Market Linked Debentures
4) It focuses on value added services i.e., safety net and estate planning services
5) It focuses towards attracting and retaining talent through an entrepreneurial work culture
6) Company has strategic approach to the marketing initiatives
What are the Objects of the IPO Offer?
Anand Rathi IPO Size is Rs 660 Crores and entire money is for Offer for Sale (OFS). Under OFS, selling shareholders would sell their shares and company would not get any money from this IPO proceeds.
Beyond OFS, company would get listing benefits.
Who is the promoter of Anand Rathi Wealth Limited?
Mr. Anand Rathi, Mr. Pradeep Gupta and Anand Rathi Financial Services Limited are the promoters of the company.
How is the company financial track record?
Here are the total assets, revenues and profits of the company in the last 3 years.
|Financial Year ending / Period ending (Amt in Mns)|
|Particulars||FY19||FY20||FY21||5 months ending Aug-21|
|Profit After Tax||584.3||616.1||451.0||510.9|
Why to invest in Anand Rathi IPO?
Here are the positive factors in this company.
1) Company is one of the leading non-bank wealth solutions firms in India.
2) It is leading mutual fund distributor in India coupled with distribution of Non convertible market linked debentures. Company’s focuses on less price sensitive HNI and underserved segment.
3) Company has posted stable revenues in the last 3 years. Its revenues are low in FY21 and one can attribute them due to impact of covid-19 pandemic.
Risk Factors of investing in Anand Rathi IPO
1) This IPO objective is only Offer for Sale (OFS). Under OFS, the IPO proceeds would go to selling shareholders and company would not get any money. Since this is the sole objective of this IPO, company would not get any fresh proceeds and it would not get benefitted except for listing gains.
2) Company margins are on declining mode in the last 3 years. Its profits were at Rs 58.4 Crores (20.5% of revenues) in FY19 Vs 45.1 Crores (16.1%) in FY20. For 5 months ending Aug-21, its profits are at Rs 51 Crores (30.2% of revenues). Investors should not carry away with such abnormal profits for short term and wait for consistency.
3) Covid-19 pandemic is uncertain and cannot be predicted and can affect the company’s business in future.
4) Company revenues from distribution and sale of financial products are dependent on its sustained ability to increase its AUM as well as the performance of the funds that they distribute. Any changes in total expense ratio due to regulatory change may reduce its distribution commission income which may have material impact on business.
5) Anand Rathi Commodities Limited, one of the promoter group entity and its Directors, on account of being a commodity broker with NSEL, are involved in a proceedings involved with SEBI and Economic Offence Wing of Mumbai Police. Also, proceedings under relevant section of IPC and MPID Act are pending against ARCL and one of its ex-Director who is also a Director in Company. Any adverse outcome in the aforesaid proceedings would have an adverse effect on the brand and reputation of the Anand Rathi Group, which could have an adverse impact on the business, financial condition and results of operations.
6) Investors should read complete risk factors indicated in the RHP of the IPO document before investing in this IPO.
Anand Rathi IPO dates for subscription, Allotment and Listing
|Finalization of Allotment||11-Dec-21|
|Initiation of Refunds||12-Dec-21|
|Credit to Demat Account||13-Dec-21|
|IPO Shares Listing Date||16-Dec-21|
Frequently Asked Questions (FAQs)
What are Anand Rathi Wealth IPO Dates?
The IPO opens on 2nd December and closes on 6th December, 2021.
What is Anand Rathi IPO Lot Size?
The IPO lot size is 27 Shares, means investors need to apply for minimum order quantity is 27 Shares.
What is the minimum amount to subscribe for Anand Rathi IPO?
Investors need to apply for 27 shares at minimum lower price band of Rs 530 per share. Minimum amount in such case would be 27 x 530 = Rs 14,310. Similarly minimum amount to be applied on upper price band would be Rs 27 x 550 = Rs 14,850.
What is Anand Rathi Wealth IPO GMP?
GMP is nothing but the premium at which the shares are trading in offline market. This is just an indication about the IPO price as it is unorganized market. Anand Rathi IPO GMP today (Source: Chittorgarh) is at Rs 90 as of the date of writing the article. GMP news on IPOWatch - Rs 100. Anand Rathi Wealth Ltd IPO GMP Chanakya - Rs 88.
Should I Buy Anand Rathi IPO?
Investors should always invest in fundamentally strong companies along with reasonable IPO price. Anand Rathi revenues are stable in the last 3 years, however its margins are on declining mode.
Is Anand Rathi IPO Price underpriced or overpriced?
Anand Rathi share price band is Rs 530 to Rs 550 per share.
1) If we take last 3 years weighted average EPS of Rs 12.81 and the upper price band of Rs 550, the P/E ratio works out to 43x.
2) If we take FY21 EPS of Rs 10.85 and the upper price band of Rs 550, the P/E ratio works out to 50x.
3) If we take EPS of 5 months ending Aug-21 and annualize for FY22, the P/E works out to be 19x.
4) Means company is asking IPO price in the P/E range of 19x to 50x.
As per RHP there is only one listed peers IIFL Wealth Management which is trading at P/E 35.7x. If we compare with this only listed peer, Anand Rathi IPO Price is fully priced.
How to apply Anand Rathi Wealth Management IPO online on Zerodha?
If you have demat account with Zerodha, you can apply this IPO online using UPI as a payment gateway. Zerodha customers can apply in Anand Rathi Wealth Limited IPO by login into Zerodha Console submitting an IPO application form.
Follow below steps to apply this IPO in Zerodha platform:
1) Visit the Zerodha portal and login to Console.
2) Go to Portfolio and click the IPOs link.
3) Visit ‘Anand Rathi Wealth Limited IPO’ row and click the ‘Bid’ button.
4) Enter your UPI ID, Quantity, and Price.
5) Click on ‘Submit’ IPO application form.
6) Visit the UPI App (net banking or BHIM) to approve the mandate.
Anand Rathi IPO Review and Recommendation
You might be wondering, Anand Rathi IPO is good or bad for investment?
Anand Rathi is one of the non bank wealth solution firms in India. It is one of the leading mutual fund distributors in India coupled with distribution of market linked debentures (MLDs).
Company posted stable revenues in the last 3 years. Its profits are on declining mode between FY19 to FY21. One can attribute lower nos due to covid-19 pandemic. These nos have improved for 5 months ending Aug-21.
While there is only one listed peer to compare, the IPO price seems to be fully priced.
Currently we are neutral about this IPO. If such company shares are available at lower price post listing, one can invest in such shares.
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