Rs 87,000 crore AUM, Rs 94 crore quarterly profit: Is Anand Rathi still a buy?

It also added Rs 3,825 crore in fresh money, 600 new client families, and still kept client attrition at just 0.11%.

So what is driving this business? Let us break it down.

Figure 1: Stock Price Movement for Anand Rathi. Source: Screener.in

What is Anand Rathi’s business, and why the numbers make sense

To understand Anand Rathi’s Rs 87,000 crore AUM and Rs 94 crore quarterly profit, it is important to understand what the company does.

Anand Rathi Wealth is a fee-based wealth management company. It does not manage mutual funds, it does not offer loans, and it does not earn brokerage from stock trading.

Instead, it earns money by giving financial advice to wealthy families and managing their long-term investment portfolios. The more assets it manages, the more it earns.

Here is how the model works:

• Clients come with Rs 50 lakh, Rs 5 crore, or even Rs 50 crore of investable wealth.
• The relationship manager (RM) builds a plan: equity mutual funds, debt funds, structured products, and sometimes real estate or insurance.
• Once money is invested, the company earns a trail fee every year. This continues as long as the money stays.
• There is no need to keep selling. More assets and more families naturally lead to more income.

This is why Anand Rathi’s revenue has grown in line with AUM.

In Q1 FY26:

Anand Rathi’s growth has come without raising debt, without marketing discounts, and without over-hiring.

Even the profit margin has improved from 30% last year to 33% now. The company added nearly Rs 4,000 crore of net inflows in Q1 alone, without needing to expand costs at the same pace.

Another reason the numbers make sense is that client stickiness is very high.

• Client attrition in Q1 was only 0.11%
• Most new clients come through referrals, not ads
• Many existing families have yet to allocate their full wealth to the company.

This means that growth can come from both new client acquisition and deeper wallet share from existing clients.

When a business has long-term revenue visibility, high client retention, and improving operating margins, they are a reflection of the model working well.

And that is what Anand Rathi has built over the last 10 to 15 years, it seems.

What can grow from here

The management still believes there is a long runway ahead.

The reason lies in both where India is going and how the firm is positioned.

1. India’s wealth is growing but still under-managed

India now has over 8 lakh high-net-worth individuals, and that number is expected to double by 2027. Most of this wealth is still under-advised or spread across fragmented portfolios. A large chunk is sitting in low-return assets like real estate, fixed deposits, or insurance plans.

This is where Anand Rathi steps in with a model built on professional advice, structured products, and long-term planning. Management believes the real opportunity is not just in winning new clients, but also in increasing wallet share from existing ones.

Figure 2: Possibility of Growth as per Anand Rathi. Source: Company’s Q1 FY26 Report

In fact, in their own words, many clients have not yet allocated their full portfolios to Anand Rathi. So even within the current base of 12,000+ families, there is room to grow deeper.

2. Structured products can drive margins and stickiness

About 27% of the company’s AUM is in structured products, which are tailor-made investment strategies designed to offer stable returns even when markets do not move much.

These are not traded like stocks or mutual funds. They are created specifically for each investor and usually come with a 1- to 3-year lock-in period. That means more predictable revenue for the company and more loyalty from the client.

The company issued over Rs 1,700 crore worth of structured products in the primary market this quarter. Management shared that this segment is expected to grow faster, especially when markets remain uncertain and investors look for downside protection.

Over the long term, this can boost both margins and customer retention.

3. Digital and OFA (Omni Financial Advisor): Still small, but scaling

Anand Rathi’s Digital Wealth arm caters to the mass affluent, those with financial assets worth Rs 10 lakh to Rs 5 crore. This is a fast-growing segment in India, and most of these investors are not served by traditional private bankers.

In Q1 FY26, Digital AUM grew 19% year-on-year, and clients rose to 6,284. The company is not spending heavily on this segment yet, but early traction shows that a tech-enabled advisory model could open up a large retail base.

Similarly, the OFA platform, which supports over 6,600 independent financial advisors, now has Rs 1.58 lakh crore of assets flowing through it. While Anand Rathi does not directly manage this money, it helps build industry-wide presence and opens up future monetisation opportunities.

Both these businesses are about building infrastructure today for optionality tomorrow.

4. RM productivity can still go up

Another major lever is improving the productivity of existing relationship managers (RMs). Currently, the average AUM per RM is around Rs 32 crore, and the average number of families served per RM is 85.

Management believes this can go higher over time as RMs mature and clients consolidate more assets.

Because Anand Rathi does not believe in heavy lateral hiring, the team grows gradually — but becomes stronger with each batch. As more RMs cross the Rs 40 crore-mark in client assets, overall operating leverage will improve. That means higher revenue without an equivalent rise in cost.

5. Stable revenue mix = Better quality of earnings

About 80-85% of the firm’s revenue now comes from trail-based, recurring income. This is very different from firms that rely on transaction-based, one-time fees.

The management has said they want to keep building this trail income. It gives the company predictable cash flows, makes quarterly numbers less dependent on market mood, and aligns the firm’s success with that of the client.

This shift in revenue quality is not visible in just one quarter, but over time, it builds a much more stable and scalable business.

Valuation, expectations, and investor takeaway

The stock price of Anand Rathi Wealth has gone from around Rs 280 in 2021 to nearly Rs 2,600 today. That is a 9x return in three years, or over 800% gains. Many investors are now asking: Is there still room to grow from here?

Let us look at the current reality.

At this price, the stock trades at a price-to-earnings (P/E) multiple of around 70 times trailing earnings. That is not cheap by any standards. But valuation is never about the past. It is about whether future growth justifies the premium.

In Anand Rathi’s case, here is what the numbers suggest:

• Revenue and profit are growing at 20-30% per year
• Margins are stable and even improving
• AUM is compounding steadily, with high visibility
• The company runs on low capital and gives back cash through dividends and occasional buybacks
• ROE is over 44%, which is rare in this industry

If earnings grow by even 25% per year, the P/E can drop into the 25-30 range in two years without needing the stock to fall. This is what long-term investors usually look for: earnings catching up with the price.

But the bigger story is the quality of business.

Anand Rathi is building scale, is largely not dependent on market cycles for survival, is growing both AUM and trust, and is focusing on recurring income rather than short-term fees.

For investors, this kind of model creates two key benefits:

• Earnings visibility, which helps avoid a sharp downside
• Multiple levers for growth, from deeper client relationships, new cities, digital channels, and product mix

Of course, no business is without risk.

Markets can go through rough periods. Client inflows can slow. Regulatory changes in commissions may impact fee structures. But for now, Anand Rathi has shown that it can grow through both upcycles and downcycles by focusing on long-term wealth creation.

So is it still a hidden gem? Probably not. But is it a business worth tracking closely as India’s wealth boom continues? Very likely, yes.

Sometimes, boring businesses that compound quietly turn out to be the most rewarding.

Note: This article relies on data from annual and industry reports. We have used our assumptions for forecasting.

Parth Parikh has over a decade of experience in finance and research and currently heads the growth and content vertical at Finsire. He holds an FRM Charter and an MBA in Finance from Narsee Monjee Institute of Management Studies.

Disclosure: The writer and his dependents do not hold the stocks discussed in this article.

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