Release Date: July 11, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Anand Rathi Wealth Ltd (BOM:543415, Financial) reported a 28% year-on-year growth in profits, reaching INR93.9 crores for Q1 FY26.
- The company's total Assets Under Management (AUM) grew by 27% to INR87,797 crores as of June 30, 2025.
- The equity mutual fund share increased to 54%, indicating a strong focus on equity investments.
- The company achieved a record net mobilization of INR3,825 crores in its flagship private wealth business.
- The digital business registered a growth of 19% year-on-year, reaching INR2,055 crores, with a significant increase in client numbers.
Negative Points
- The client admission rate remains low at 0.11%, which may indicate challenges in attracting new clients.
- Regret RM attrition was 2% for the quarter, suggesting some issues with retaining relationship managers.
- Operating expenses showed a divergence from revenue growth, raising questions about cost management.
- There was a notable decrease in employee expenses as a proportion of total revenues, which may impact employee incentives.
- The company's AUM increased by 9% quarter-on-quarter, but there was a previous decline in past quarters, indicating potential volatility in asset growth.
Q & A Highlights
Q: Can you provide data on net inflows during the quarter in mutual funds and structured products?
A: The net inflow was INR3,825 crore. On equity mutual funds, it was INR1,983 crores, debt mutual funds INR300 crores, structured products INR1,063 crores, and other items INR480 crores. - Jugal Mantri, CFO
Q: There seems to be a significant divergence between revenue growth and OpEx growth. Is there any change in incentive structure or cost-cutting measures?
A: OpEx is in line with historical trends. The divergence is due to the maturing of Relationship Managers (RMs) who have started contributing to revenue but have not yet reached the incentive level. The incentive formula has not changed since 2007. - Jugal Mantri, CFO
Q: The number of RMs has been flat for the last three quarters. What is the strategy regarding RM expansion?
A: We focus on internal promotions rather than lateral hiring. We have a threshold for RM numbers, and when it drops, we promote more people. We have added about 20 RMs in the last year. - Feroze Azeez, Joint CEO
Q: Employee expenses as a proportion of total revenues have decreased significantly. Is there a differential in incentives paid on mutual funds versus MLDs?
A: There is no differential in incentives between mutual funds and MLDs. The decrease is due to the distribution of revenue among RMs and their respective incentive slabs. - Feroze Azeez, Joint CEO
Q: The AUM has increased by 9% QoQ after declining for past quarters. Is there a change in portfolio allocation strategy?
A: The increase is due to large clients opting for staggered equity investments, resulting in temporary debt allocation. This is not a permanent shift. - Feroze Azeez, Joint CEO
Q: What is the impact of recent market regulations on structured products?
A: We do not foresee any challenges for the next INR1.5 lakh crores of AUM. We are diversifying in terms of indices and have plans to adapt to regulatory changes. - Feroze Azeez, Joint CEO
Q: Can you provide an update on the international expansion in the UK and Bahrain?
A: We are in the process of obtaining licenses. We see significant potential in NRI investments in India and are building our international presence brick by brick. - Feroze Azeez, Joint CEO
Q: There is a gap between AUM growth and revenue/PAT figures. Can you explain this?
A: AUM is a snapshot, while revenue is a continuous flow. The market's performance on specific dates affects AUM figures, but revenue reflects ongoing client activity. - Feroze Azeez, Joint CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
