‘We will remain focused on HNI segment with investable surplus of Rs 5-50 crore’

We offer solutions to our wealth clients from long-term perspective, and it has worked well in the past also during volatile market scenarios. We are confident that our strategies will deliver during such unforeseen scenarios too.

Anand Rathi, founder & chairman, Anand Rathi Group
Anand Rathi, founder & chairman, Anand Rathi Group

By Ruchit Purohit

Anand Rathi Wealth has a long-term perspective for its clients, which has worked out well in the past amid volatility in the markets. Its entrepreneurial, collaborative work culture and training mechanism are the critical factors for AUM growth and success of the business, Anand Rathi, founder & chairman, Anand Rathi Group, tells Ruchit Purohit. Excerpts:

A 9% gain on listing and a little profit taking later, was the issue priced fairly?

Yes, our issue price at Rs 550 per share was fair, which was demonstrated by oversubscription in each category of investors and also listing at 9% premium.

As a significant portion of your revenue is linked to market levels and there is likely to be some correction in the near to medium term, what impact will it have on your wealth business?

We offer solutions to our wealth clients from long-term perspective, and it has worked well in the past also during volatile market scenarios. We are confident that our strategies will deliver during such unforeseen scenarios too.

Your business performance is linked to market performance and the last 10 years have seen markets rise due to QE. What is in store ahead?

Market performance in the last 10 years has been much more subdued as compared to the previous 10 years. For example, nearly 20% [of the] time, one year equity return between 2000-09 was higher than 50%. In contrast, during 2010-20, only 3% [of the] time, similar equity returns were generated. Moreover, contrary to conventional economic thinking, QE in the last 10 years did not result in higher retail inflation. So it is hard to argue that QE led to strong asset price inflation in the last 10 years.

How do you plan to hold ground and further tap AUM growth amid the rising competition in the wealth management space?

The potential of wealth management business in India for HNIs, particularly for the 5 crore to50 crore segment, is huge, with increasing number of dollar millionaires. In fact, today there are not enough wealth managers and majority of the millionaires do not have access to properly trained wealth managers. Our approach for our client is holistic, uncomplicated and standardised. We don’t follow a product-selling approach but a client’s goal-driven approach, which aims to achieve consistent client return outcomes through a standardised investment strategy. We also believe that our entrepreneurial, collaborative work culture and training mechanism are the critical factors for AUM growth and success of our business.

Which segments will primarily drive your overall earnings growth in future?

We have developed a robust and scalable business model with annuity-based revenue streams, investments in digital platforms, high operating margins and return on equity — all put together this offers a unique and great value proposition.

Are you only targeting HNIs or you will also look at emerging HNIs and the millennials?

We have chosen to cater to the HNI segment which has an investable surplus of Rs 5-50 crore and who are happy to pay the full price for the value delivered. We will remain focused on this client segment and endeavour our best to help them in generating a healthy return, significantly over inflation.

How do you see the markets going forward from current levels? What is your take on valuations?

[My] fundamental outlook of the Indian economy … is very positive from both medium to long-term perspective. If we look at Nifty 50 PE valuation multiple, it has gone up considerably over time. The average has increased from 17 during 2000-05 to 20 during 2006-14 and further to 26 during 2015-21. Currently, Nifty 50 is trading around 24 PE, which is bit lower than the recent year averages. In my view, Indian equities are valued in their normal range and are likely to remain in a similar range in the medium term.

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