Anand Rathi Wealth debuts at 9% premium over its issue price

Post listing, the stock has moved higher by up to Rs 614.95, up 12 per cent against the issue price of Rs 550 per share on the BSE

Anand Rathi Wealth (ARWL), one of the leading non-bank wealth solutions firms in India, has made a decent stock market debut, with its equity shares listed at Rs 602.05, a 9 per cent premium over its issue price of Rs 550 per share on the BSE. The stock opened at Rs 600 on the National Stock Exchange (NSE).

Post listing, the stock moved higher to Rs 614.95, up 12 per cent versus the issue price. At 10:01 am; it was traded at Rs 611 on the BSE. A combined around 4 million equity shares changed hands on the NSE and BSE in early trades.

Commenting on the market deubut, "We expect a sharp decline in the stock post-listing. My advice to investors is to book listing gain profit and re-enter at around Rs 420 per share levels," said Ravi Singhal, vice-chairman at GCL Securities.

The initial public offering (IPO) of ARWL had received good response from the investors, with issue subscribed 9.78 times. The reserved portion for qualified institutional buyers was subscribed 2.5 times, and that of non-institutional investors saw 25.42 times subscription, while retail investors allotted quota being subscribed 7.76 times, data shows.

The IPO consisted entirely of an offer of sale (OFS) comprising of 12 million equity shares. The promoters and promoter group shareholding will decline from 74.74 per cent to 48.82 per cent post IPO. The company expects to receive the benefits of listing of the equity shares, including to enhanced visibility and brand image among existing and potential customers.

ARWL is a non-bank wealth solutions firms in India which serves a wide spectrum of clients through a mix of wealth solutions, financial product distribution and technology solutions. The services are provided primarily through flagship Private Wealth (PW) vertical. Overall, the company manages Rs 30,209 crore in AUM as of August 2021.

The company acts as a mutual fund distributor, registered with the Association of Mutual Funds in India. It distributes mutual fund schemes managed by asset management companies and earns distribution commissions on a trail basis from asset management companies. It purchases non-convertible market linked debentures (MLDs) and offers them to its clients and earns income from these sales. Therefore, the AUM of the company comprises mutual fund schemes and other financial products such as bonds, MLDs and other securities held by clients in their own de-mat accounts.

India has the lowest mutual fund penetration globally. The total AUM to GDP ratio of India stands at a mere 16 per cent, way below the global average of 63 per cent. Countries like the US have AUM to GDP ratios of over 100 per cent. So, the mutual fund industry in the country provides huge scope for growth and development. Real estate and gold have become less attractive forms of investments post demonetisation. Even the reduction in bank deposit rates in the past year has led to a shift in investment to mutual funds and the stock markets, HDFC Securities had said in IPO note.

ARWL’s revenues from distribution and sale of financial products are dependent on its sustained ability to increase its AUM as well as on the performance of the funds that it distributes. Any changes in the total expense ratio due to regulatory changes may reduce distribution commission income which may have a material adverse effect on the business, financial condition or results of operation, are among key concerns, the brokerage firm said.