Anand Rathi Wealth posts zero attrition, 24% PAT growth in Q1
Q1 PAT ₹116 cr beats guidance trajectory; market share in mutual fund net flows hits 2.47% from 0.18% at IPO.
What's new
- Q1 PAT ₹116 cr, up 24% YoY, PAT margin 34.4%.
- Client attrition 0.09% on AUM basis; zero RM regret attrition.
- Mutual fund net flows market share 2.47%, up from 0.18% at IPO.
- AUM ₹1,06,300 cr, net flows ₹2,743 cr absorbed despite volatility.
Themes from the call
Demand
AUM grew 21% YoY to ₹1,06,300 cr; net flows of ₹2,743 cr absorbed despite Q1 market volatility.
Margins
PAT margin at 34.4% remains high; TER pressure from AMCs is minimal at 1-3 basis points pass-through due to scale.
Capital allocation
AMC license application board-approved; UK operations commenced; Gift City first stage operational – all funded internally with no near-term profit expectations.
Guidance watch
- FY27 revenue guidance ₹1,415 cr, PAT ₹460 cr; Q1 achieved 24% and 25% respectively.
- 20-25% consolidated AUM growth target over three years; platinum clients to expand from 230 to 400-500 in two years.
- Market share aspiration: 4% of projected ₹150 lakh cr AUM in 8-10 years.
- Refused to guide on LRS international expansion and investment banking.
Risk flags
- TER pressure from AMCs to distributors is emerging; Anand Rathi's scale limits pass-through to 1-3 bps, but industry pressure is 5-10 bps.
- Structured products have concentration in ARGFL (group entity); two independent high-rated bond defaults validate caution but create counterparty risk.
- Q1 market volatility could affect net flows in subsequent quarters; Q1 achieved 24% of revenue target but remainder of year is uncertain.
Key quotes
-
"We can grow for the next several years at 20-25%."
— Feroze Aziz, Joint CEO -
"Our attrition rate is 0.09% on AUM basis and we had zero RM regret attrition in the quarter."
— Management
The brief
Anand Rathi Wealth delivered a Q1 that reads like a textbook demonstration of its bull case. Revenue rose 18% to ₹336 cr, PAT grew 24% to ₹116 cr, and PAT margin held at 34.4%. The standout number, however, is zero: zero RM regret attrition, and client attrition of just 0.09% on AUM basis. In an industry where 4-10% turnover is normal, that figure is exceptional.
Market share in mutual fund net flows jumped to 2.47%, from 0.18% at IPO. That is compounding scale: the more AUM Anand Rathi gathers, the stronger its negotiating power with AMCs, allowing it to absorb TER compression with minimal pass-through. The 20-25% long-term growth guidance looks achievable if the current trajectory holds.
Yet the call carried three flags. First, TER pressure from AMCs is real — industry-wide 5-10 basis points, though Anand Rathi estimates its impact at just 1-3 bps. That can widen if market share growth slows. Second, structured products lean heavily on ARGFL, a group entity. Management argues that two high-rated bond defaults in India validate its cautious approach, but concentration is concentration. Third, Q1 achieved exactly 24% of full-year revenue guidance and 25% of PAT guidance — on track, but it is only one quarter.
The multi-segment strategy (AMC license, UK, Gift City) is early and not yet contributing. That is fine for now, but costs will rise before returns do.
Anand Rathi's zero-attrition model is the moat. The question is whether scale gains can keep offsetting industry headwinds as the business grows.
Anand Rathi's zero-attrition model is the moat — the question is how long it stays zero.