Anand Rathi Share IPO review

•    The company is an established full-service brokerage house in India with over three decades of experience.
•    It is operating in a highly competitive and fragmented segment.
•    The company reported steady growth in its top and bottom lines for the reported periods.
•    The company has outperformed its peers and poised for fast forward mode.
•    Well-informed investors can park funds for the long term.

ABOUT COMPANY:
Anand Rathi Share & Stock Brokers Ltd. (ARSSBL) is an established full-service brokerage house in India with over 30 years of experience. It provides broking services, margin trading facility and distribution of financial products under the brand ‘Anand Rathi’ to a diverse set of clients across retail, high net worth individuals, ultra-high net worth individuals and institutions. Its investment offerings span across a wide array of asset classes like equity, derivatives, commodities, and currency markets. While its client base is spread across various age demographics, 186,859 of Active Clients, representing 84.36% of Active Clients, were above 30 years of age as on March 31, 2025. Its 3 decades of track record, comprehensive product offerings, and focus on serving this key demographic, positions it for
continued growth. 

It is a part of the Anand Rathi group which carries out a diverse range of financial services business through its group companies. As of March 31, 2025, it offers broking and other financial services through (i) network of 90 branches spread across 54 cities in India; (ii) network of 1,125 Authorized Persons (i.e., agents appointed by us after approval from the relevant stock exchange) spread across 290 cities in India; and (iii) online and digital platforms. Its multi-channel presence through pan India branches and network of Authorized Persons and online and digital platforms enables it to service clients across Tier 1, Tier 2, Tier 3 and other cities.

As per CARE Report, during Fiscal 2025, it had the highest average revenue per client (i.e., broking revenue over NSE Active Clients for the period) (ARPC) amongst peer set. The Company funds a majority of its working capital requirements in the ordinary course of business from banks, financial institutions, debt securities and internal accruals. As on June 30, 2025, the Company had sanctioned
facilities aggregating Rs. 2398.97 cr. comprising Rs. 1343.60 cr. of fund-based limits, Rs. 925.00 cr. of non-fund-based limits, Rs. 130.37 cr. towards outstanding amount of non-convertible debentures and Rs. 126.74 cr. of unsecured borrowings. 

Its MTF Book has grown at a CAGR of 34.91% between March 31, 2023 and March 31, 2025. As of March 31, 2025, it had 886644 total number of clients, out of which 221510 clients were active. 

ISSUE DETAILS/CAPITAL HISTORY:
The company is coming out with its maiden book building route IPO of equity shares worth Rs. 745.00 cr. (for approx. 17995169 equity shares at the upper cap). The company has announced a price band of Rs. 393– Rs. 414 per equity shares of Rs. 5 each. The issue opens for subscription on September 23, 2025, and will close on September 25, 2025. The minimum application to be made is for 36 shares and in multiples thereon, thereafter. Post allotment, shares will be listed on BSE and NSE. The issue constitutes 28.70% of the post-IPO paid-up equity capital. From the net proceeds of the IPO funds, it will utilize Rs. 550.00 cr. for working capital, and the rest for general corporate purposes.

The company has reserved equity shares worth Rs. 10.00 cr. for its eligible employees and offering them a discount of Rs. 25 per share. From the rest, it has allocated not more than 50% for QIBs, not less than 15% for HNIs and not less than 35% for Retail investors.
 
The joint Book Running Lead Managers (BRLMs) to this issue are Nuvama Wealth Management Ltd., DAM Capital Advisors Ltd., and Anand Rathi Advisors Ltd., while MUFG Intime India Pvt. Ltd., is the registrar to the issue. Nuvama Wealth Management Ltd., Sharekhan Ltd., and JM Financial Services Ltd., are syndicate members.

Having issued initial equity shares at par, the company issued further equity shares in the price range of Rs. 25.00 – Rs. 124.00 per share between June 1997, and March 2024. It has also issued bonus shares in the ratio of 1 for 2 in N0vember 2022. The average cost of acquisition of shares by the promoters is Rs. 41.94 per share. 

Post-IPO, its current paid-up equity capital of Rs. 22.36 cr. will stand enhanced to Rs. 31.36 cr. Based on the upper cap of the IPO price band, the company is looking for a market cap of Rs. 2596.18 cr. 

FINANCIAL PERFORMANCE:
On the financial performance front, for the last three fiscals, the company has (on a consolidated basis) posted a total income/net profit, of Rs. 468.70 cr. / Rs. 37.75 cr. (FY23), Rs. 683.26 cr. / Rs. 77.29 cr. (FY24), and Rs. 847.00 cr. / Rs. 103.61 cr. (FY25). The company has posted steady growth in its top and bottom lines for the reported periods.

For the last three fiscals, the company has posted an average EPS of Rs. 19.58 (basic) and an average RoNW of 21.95%. The issue is priced at a P/BV of 3.65 based on its NAV of Rs. 113.57 as of March 31, 2025, and at a P/BV of 2.08 based on its post-IPO NAV of Rs. 199.08 per share (at the upper cap).

If we attribute FY25 earnings to its post-IPO fully diluted paid-up equity capital, then the asking price is at a P/E of 25.06. Based on FY24 earnings, the P/E stands at 33.58. Thus, the issue appears aggressively priced. 

The company has shown PAT margins of 8.05% (FY23), 11.31% (FY24), 12.23% (FY25), and RoCE margins of 16.72%, 21.48%, 21.32%, respectively for the referred periods.

DIVIDEND POLICY:
The company has not paid any dividends for the reported periods of the offer document. It has already adopted a dividend policy in November 2024, based on its financial performance and future prospects.

COMPARISON WITH LISTED PEERS:
As per the offer document, the company has shown Motilal Oswal, IIFL Capital, Geojit Financial, and Angel One as their listed peers. They are trading at a P/E of 20.4, 12.6, 14.3, and 20.7 (as of September 19, 2025). However, they are not truly comparable on an apple-to-apple basis.

MERCHANT BANKER’S TRACK RECORD:
The three BRLMs associated with the offer have handled 44 pubic issues in the past three fiscals, out of which 13 issues closed below the offer price on the listing date.