Anand Rathi Wealth — Motilal Oswal Maintains 'Neutral' Stance On The Stock After Q3 Results; Here's Why

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Motilal Oswal Report

Anand Rathi Wealth Ltd. reported operating revenue at Rs 2.4 billion in Q3 FY25, up 30% YoY (6% miss). The overall revenue growth was driven by a 52% YoY increase in the MF business revenue, which reached Rs 1.1 billion. For 9MFY25, the overall revenue from operations grew 33% YoY to Rs 7.2 billion.

Opex grew 27% YoY to ~Rs 1.3 billion, but declined 6% sequentially due to 8% decline in employee costs to Rs 1 billion. As a result, the cost-to-income ratio improved 141 bp YoY and 224 bp QoQ, reaching 54.8% in Q3 FY25 (versus 56.3% in Q3 FY24 and our estimate of 56.6%).

PAT for the quarter stood at Rs 773 million, reflecting a 33% YoY growth (in line with our estimates). For 9MFY25, it grew 34% YoY to Rs 2.3 billion. PAT margins for Q3 FY25 expanded 79 bp YoY to 32.6%. (Our estimate at 31.6%).

We expect Anand Rathi Wealth to report an AUM/revenue/PAT CAGR of 26%/26%/28% during FY24-27. With a robust cash generation (Rs 8.9 billion of operating cash flow during FY24-27E), an RoE of 40%+, and a healthy balance sheet, the company’s valuation is well-priced at 42x FY26E P/E.

We have cut our FY25/26/27 EPS estimates by 3%/7%/6% to factor in slower AUM growth. We maintain a Neutral rating on the stock with a one-year target price of Rs 4,200 (premised on 40x Sep’26E P/E).

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