Is Anand Rathi IPO GMP Worth It?

Anand Rathi Share & Stock Brokers is stepping into the market with an IPO to raise ₹745 crore. The fresh equity will fund long-term working capital needs, while reducing promoter holdings from 98% to 69.9%.

The company has seen robust revenue growth, with active clients rising from 1.5 lakh in FY23 to 2.2 lakh in FY25. Revenue per client also improved, reaching ₹29,347, higher than most peers.

The IPO is priced at a premium compared with similar broking firms, reflecting expectations of sustained growth.

With multiple revenue streams including broking, margin trading, and third-party product distribution, Anand Rathi presents an interesting option for investors seeking long-term gains, though risk appetite remains a key factor.

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Key Takeaways

1. Anand Rathi IPO aims to raise ₹745 crore while diluting promoter stake to 69.9%.

2. Revenue doubled in two years, with active clients and per-client income rising significantly.

3. IPO valuation is higher than peers, suitable for long-term investors with moderate to high risk appetite.

Understanding Anand Rathi’s Business Model

Anand Rathi operates across equities, derivatives, commodities, and currency markets. It also offers margin trading facilities and distributes third-party financial products.

With 90 branches across 54 cities and digital platforms, the company ensures accessibility for both retail and institutional investors.

Key Business Highlights

• Broking Revenue: Accounts for 60% of total revenue.

• Non-Broking Revenue: Comes from margin trading and product distribution, helping cushion the business against market volatility.

• Client Growth: Active clients increased from 1.5 lakh in FY23 to 2.2 lakh in FY25.

The diversity in revenue streams ensures the company is not overly dependent on market fluctuations.

Its high average revenue per client demonstrates strong monetization of its customer base, positioning Anand Rathi as a growing player in India’s financial services sector.

Read Also: Anand Rathi IPO GMP: Price Band, Details & Should You Apply?

Financial Performance and Growth

Anand Rathi’s financial performance has been impressive over the last two years. Revenue nearly doubled from ₹467.8 crore in FY23 to ₹845.7 crore in FY25.

Broking and related services contributed ₹510.3 crore, while interest income from margin trading added ₹114.3 crore.

Profit after tax rose to ₹103.6 crore from ₹37.7 crore, and EBITDA jumped from ₹115.1 crore to ₹311.3 crore.

EBITDA margin improved from 24.6% to 36.8%, reflecting operational efficiency, though still below some competitors like Motilal Oswal and IIFL Capital.

Return on equity strengthened from 15.3% to 23.1%, signaling better utilization of shareholder capital.

Key Metrics for Investors

Revenue Growth: Doubled in two years, highlighting expansion.

Profitability: PAT and EBITDA margin increased significantly.

ROE Improvement: Stronger return signals growing efficiency in capital use.

Investors looking for a combination of growth and reasonable risk may find these financials encouraging, though valuations remain on the higher side.

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IPO Valuation and Market Considerations

The IPO is priced at a trailing P/E multiple of 25, higher than peers such as Motilal Oswal (20.9) and Geojit Financial Services (11.5).

This premium reflects investor optimism about the company’s growth trajectory and market positioning.

While higher valuations can deter risk-averse investors, the strong client base and multiple revenue streams support the long-term growth thesis.

Factors to Consider

• Premium Valuation: Higher than most peers, implying expectations for continued revenue growth.

• Market Position: Anand Rathi’s strong client base and per-client revenue suggest sustainable profitability.

• Investment Horizon: Best suited for long-term investors comfortable with moderate to high risk.

Careful assessment is recommended. While short-term gains may be possible, the IPO’s true value will likely be realized over a multi-year horizon as the company scales operations and captures market share.

Read Also: Is the Urban Company IPO Worth It?

Conclusion

Anand Rathi IPO combines strong historical growth, a growing client base, and diversified revenue streams, making it an attractive option for investors with a long-term perspective.

The high valuations reflect optimism about future earnings and market expansion, though they also imply a higher entry point.

Investors should balance their risk tolerance with potential rewards, and carefully consider their investment horizon.

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FAQ

What is the size of the Anand Rathi IPO?

The IPO aims to raise ₹745 crore through fresh equity to fund long-term working capital.

How much stake will promoters hold after the IPO?

Promoter stake will reduce from 98% to 69.9% post-IPO.

What are the main revenue streams for Anand Rathi?

Broking accounts for 60% of revenue, with margin trading and third-party product distribution making up the rest.

How has the company’s client base grown?

Active clients increased from 1.5 lakh in FY23 to 2.2 lakh in FY25, with revenue per client rising significantly.

Who should consider investing in this IPO?

Long-term investors with a moderate to high risk appetite looking for growth in the broking sector.

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