Anand Rathi Wealth: Target Price Set at Rs 3100 by Motilal Oswal

Anand Rathi Wealth Posts Strong Revenue Growth, Beats PAT Estimates

Anand Rathi Wealth (ARWM) has reported an operating revenue of approximately INR2.9 billion in 4QFY26, marking a 30% year-over-year (YoY) growth but remaining flat quarter-over-quarter (QoQ). The growth was primarily driven by a 35% YoY increase in revenue from the distribution of financial products and a 24% YoY growth in revenue from mutual funds.

For the fiscal year 2026, Anand Rathi Wealth's operating revenue grew 22% YoY to INR11.5 billion. Operating expenses for 4QFY26 increased by 55% YoY to INR2 billion, with employee costs rising 67% YoY and other expenses growing 15% YoY.

The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was INR848 million, down 7% YoY due to a one-time Employee Stock Option Plan (ESOP) impact. The EBITDA margin stood at 29.5% in 4QFY26, lower than the 40.9% recorded in 4QFY25. Excluding the ESOP impact, EBITDA was INR1.2 billion, in line with estimates, with margins at 43.1%, slightly lower than the estimated 44.3%.

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For 4QFY26, consolidated Profit After Tax (PAT) stood at INR1 billion, a 40% YoY increase. Excluding one-time impacts, PAT came in at INR920 million, a 25% YoY growth and in line with estimates. For the fiscal year 2026, PAT was INR3.9 billion, a 28% YoY increase and slightly better than the guidance of INR3.75 billion.

Outlook and Recommendations

We expect Anand Rathi Wealth's Assets Under Management (AUM), revenue, and PAT to expand at a Compound Annual Growth Rate (CAGR) of 22%, 20%, and 20%, respectively, over FY26-28. The company is expected to generate robust cash flows (INR8.3 billion of Operating Cash Flow during FY26-28E) and maintain a healthy balance sheet with a Return on Equity (RoE) of over 35%.

Based on these projections, we reiterate our Neutral rating for Anand Rathi Wealth, with a one-year target price of INR 3,100, based on 45x FY28E Earnings Per Share (EPS).

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