Anand Rathi Wealth's initial public offering (IPO) to raise Rs 660 crore opened for subscription on Thursday, December 2. The Anand Rathi IPO is entirely an offer for sale (OFS) of 1.2 crore shares by promoters and existing shareholders. Anand Rathi Wealth shares are available for bidding in a price band of Rs 530-550 in multiples of 27 under the IPO, which will close for subscription on Monday, December 6.

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Anand Rathi Wealth, part of Mumbai-based financial services group Anand Rathi, raised Rs 194 crore from 12 anchor investors ahead of the IPO.

Anand Rathi Wealth commanded a premium of Rs 125 in the grey market - an unofficial market for unlisted securities - ahead of the IPO, according to dealers.

Anand Rathi Wealth shares are likely to be listed on stock exchanges BSE and NSE on December 14.

Should you subscribe to the Anand Rathi Wealth IPO? Here’s what brokerages say:

Nirmal Bang

The brokerage recommends subscribing to the Anand Rathi Wealth IPO. Anand Rathi's wealth management business has characteristics skewed more towards AMCs than stockbrokers, with the company's RoE consistently higher than peers like IIFL Wealth and Edelweiss Wealth, it said.

Although ARW’s FY19-21 growth in revenue and profits has lagged behind Edelweiss Wealth, its current year growth has been encouraging and above that of both its peers. At valuations of 18.7 times the annualised April-August 2021 earnings, Anand Rathi Wealth does offer some scope for upside on the listing, given around an earnings CAGR potential of around 20 percent in the longer term combined with a cross cycle RoE range of 20-30 percent, according to Nirmal Bang.

Angel One

The brokerage recommends subscribing to the Anand Rathi IPO.

"Anand Rathi Wealth might be a great investment option for individuals willing to dig into the benefits of mutual fund distributors. It belongs to the list of top-tier mutual fund distributors according to the gross commissions it earned in the previous financial year," Angel One said.

Willing investors must consider their investment goals and probable market risks before subscribing to the Anand Rathi Wealth IPO, it added.

ICICI Direct

The brokerage is positive on the space and recommends subscribing to the Anand Rathi wealth IPO.

"Anand Rathi Wealth is a play on wealth management business where the ultra HNI segment is witnessing significant growth. Given the fundamentals and growth potential, the valuation of the company looks reasonable. At the upper end of the price band, the company is valued at around 7.5 percent AUM and around 18.7 times its EPS (annualised FY22E)," ICICI Direct said.

"Anand Rathi Wealth's closest listed peer IIFL Wealth has over Rs 2.2 lakh crore in AUM, and is trading at 25 times FY22E (consensus), and offers healthy growth potential," it added.

Elite Wealth

Anand Rathi Wealth is among the leading mutual fund distributors in India by its AUM and has shown strong additions in AUM for the past three years. However, the company has seen declines in revenue and profit after tax in FY21 due to higher operating costs, according to Elite Wealth, which recommends avoiding the Anand Rathi IPO.

"The mutual fund industry in the country provides huge scope for growth and development. At the upper end of the price band, the company is asking a price-to-earnings of 50 times on FY21 earning as against peer companies' 28 times," it said.

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(Edited by : Sandeep Singh)

First Published:Dec 2, 2021 9:10 AM IST