what you should do in Anand Rathi share hold or sell after IPO listing

 What should Investors do in Anand rathi wealth Share after IPO Listing?

Anand Rathi Wealth IPO One such IPO came after a long time in the Indian stock market which was different from all. If we talk about a few months ago, the IPO of Angel Broking Company has already been listed in the Indian stock market and also made investors' money. In today's time, everyone wants to increase their wealth. Wealth Management is such a service that along with giving guidance to the people in the financial market, they also increase their wealth. Anand Rathi wealth Management Company came up into Indian market for raising 660cr through IPO which was entirely offer for sale. Anand Rathi IPO was subscribed by 9.78 times out of which retail segment was subscribed by 7.76 times, QIB portion was subscribed by 2.50 times & NII portion was subscribed by 25.42 times with the IPO price band 530rs to 550rs. It means that Anand rathi wealth IPO had received average response. If you IPO bidder will get shares allotment then they were thinking that should they hold or sell Anand Rathi wealth share after its listing? If IPO bidders had not received stock in the allotment then they might think to buy anand rathi stock. Today we will try to find out the best answer on it. First try to understand the business of the Anand rathi wealth management company.

Anand Rathi wealth management business model:

Anand Rathi Wealth is one of the leading non-bank wealth solutions Company in India with the current market cap of 2288cr. As of August 221 data, Company has more than 30,000 crore Assets Under management & having more than 6000 clients as per FY21 report. Mr. Anand Rathi is founder & chairman of the company who had associated company since March 2005. Company is in safe hand when we talk about the young management team like Amit Rathi, Non executive director & pradeep gupta, vice chairman & co founder of the company. Since 2002, Company is into Private Wealth, catering to high and ultra high net worth individuals HNIs & UHNIs. Also, Anand Rathi Wealth Limited is a registered AMFI Mutual Fund Distributor in the business. Private wealth segment has clients nearly 6100 & currently Company has presence across 11 cities in India which includes Mumbai, Chennai, Pune, Chandigarh, Bengaluru, Delhi, Gurugram, Hyderabad, Kolkata, Jodhpur and Noida. Company has also a representative office in Dubai.

Question:

What are the negative points of Anand  Rathi wealth management Company?

Answer:

1) Company had cam up completely with offer for sales means IPO raised funds will not come into the company.

2) Valuations of the company are average & we can say that IPO price band 530rs to 550rs is fairly priced & not much upside is expected after IPO listing

3) Company is more into B to C business (Business to customer). There is lot of competition into this segment. More local companies are coming into the same business. Any new entrepreneur can start this business but it is not guaranteed that such businesses will sustain long or not

4) Not much margin left into this business. If we will compare Anand Rathi with IIFL wealth then in FY21 Anand Rathi had reported total income of 279cr & IIFL wealth had recorded total income of 1659cr. It is clear that Anand rathi has big competition into the market with its peers.

5) Anand rathi wealth IPO is coming up with P/E of 50.7 multiple, which is high as compared with IIFL wealth which is currently trading at P/E of 35.5 multiple.

6) Company business is mainly depend on the stock market trend because if Stock market is in bull trend then new investors & traders will come into the market but once stock market will go into the grip of bears then most of the people come out of the stock market and stay away from the market . At the end, this situation is not in favour of the company & we can say that there is not sustainable growth in this segment of the business.

7) Anand rathi EPS is nearly 10.85. if we will compare it with EPS of IIFL wealth is 41.75. It means Anand rathi is asking for higher valuations

8) Anan Rathi wealth will trade P/BV of 9.5 multiple which is very high if compare with IIFL wealth is 4.5 multiple.

9) Key Promoters are selling their shares through offer for sale. Promoters & Management is selling 28% stake.

10) More dependency on Anand Rathi global finance for structure products & One NBFC is operating without RBI Authorization.

11) Company had reported Profit after tax  is 0.19cr which is very less compared with IIFL wealth, Edelweiss having  1.35cr & 1.95cr respectively.

Question:

What are the Positive about Anand  Rathi wealth Company?

Answer:

1) Company has vast experience in the financial market & having very strong management.

2) Long time back company has already made big investment and started its business. Now there is not much funds are required for big expansion.

3) Private Wealth segment has two other new age technology led business verticals - Digital Wealth and Omni Financial Advisors which attracts more clients toward company.

4) Company had show Return on equity in FY21 which was nearly 19%.

5) In FY22, In 5 months, in mutual funds segment Company sales was nearly 17,375cr & income was nearly 55cr which looks average to good.  Mkt lined debentures sales was nearly 1150cr & Income from this was nearly 93cr.

6) As per company management, they had created strong niche in the 5 to 50 crore in investable surplus client segment & this is the segment which not required only good advice on their investment but also willing to pay more for quality advice.

7) Company is into the business which generates more free cash flows & weighted average ROE is nearly 28%

Our recommendation on Anand Rathi Stock hold or sell:

If you got Anand Rathi shares in the IPO allotment then it is better to book the profit if it opens higher from the IPO price of 550rs. As per our above discussion, Company management is good but the business growth prospects are very challenging.  Not much profit margins are involved in this business. There is more competition in this business segment. Company needs long term to to earn good profit and company has to establish long term client relationship for generating business which looks very challenging in the coming years. It is better to book profit in Anand Rathi stock after listing or trail stop loss with 5% from IPO price of 550rs.

Questions:

What are the long term targets of Anand Rathi Share? 

Should you sell anand rathi stock?

Answer:

As per our calculations Anand Rathi IPO price was fairly priced but still some upside we may see in the coming months. Our long term target of anand rathi stock is 590rs to 640rs+ but it is better to accumulate the stock at lower levels in small number of sets. Otherwise there are other options are available into the Indian stock market which may give better returns in the future.  Do not Jump in After IPO listing of Ananda rathi share for buying it. If anyone really interest to buy Anand Rathi stock for long term (2 to 3 years) point of view then it is better to start accumulate after 10% to 20% correction into the stock if it comes otherwise trade in it with the stoploss of 520rs on closing basis.