Anand Rathi Wealth : Transcript of Analysts/Institutional Investor Meet/Con. Call

"Anand Rathi Wealth Limited

Q2 H1 FY2023 Earnings Conference Call"

October 14, 2022

Disclaimer: E&OE - This transcript is edited for factual errors. In case of discrepancy, the audio recordings uploaded on the stock exchange on October 14, 2022 will prevail.

MANAGEMENT: MR. FEROZE AZEEZ - DEPUTY CEO

MR. JUGAL MANTRI - GROUP CFO, ANAND RATHI

GROUP

MR. RAJESH BHUTARA - CFO, ARWL

MR. CHETHAN SHENOY - DIRECTOR AND HEAD -

PRODUCT AND RESEARCH

MR. VISHAL SANGHAVI - HEAD IR

Page 1 of 14

Anand Rathi Wealth Limited

October 14, 2022

Moderator:Ladies and gentlemen, good day and welcome to the Anand Rathi Wealth Limited Q2 H1 FY2023 Earnings Conference Call. This conference call may contain forward-looking statements about the company which are based on the belief, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.

As a reminder all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand over the conference to Feroze Azeez, Deputy CEO. Thank you and over to you, Sir.

Feroze Azeez:Thank you Rutuja. So, good afternoon everyone. Thanks to join us for the Earnings Conference Call of the quarter and the half year ended 30th September, 2022. I am joined with, Mr. Jugal Mantri, our Group CFO; Rajesh Bhutara, who is our CFO; Vishal Sanghavi, who is our Head IR; Chethan Shenoy, Director and Head- Product and Research; and we are also joined by the SGA team which is our Investor Relations Advisors.

Let me begin with sharing a piece of good news from our perspective. In the recently published report by AMFI for the financial year FY '22, we were ranked among the top three non-bank mutual fund distributor as per gross commission and over the previous financial year the growth in the mutual fund trail revenues was almost about 72%. And in the B2C category, we were the highest, if you exclude the aggregator B2B business models.

Now coming to the strong performance we've had in this half year, not just on the flagship business, but on all three of the businesses including the Digital Wealth and the Omni Financial Channel Vertical as well. Our flagship business, Private Wealth grew by about 15% year-on- year on AUM, in-spite of a very lackluster market and a 3% downtick on Nifty over 30th September both years and a 9% increase quarter-on-quarter on the AUM.

On the back of huge penetration into the wallets, especially during sideways movements or bad markets and uncertainties, we are able to establish our credibility as a wealth outfit much better during bad times. So, penetration has resulted in AUM increase and also clients refer you more clients when their friends are struggling with other managers. So that's why, our net mobilization numbers have doubled when compared to the same period previous year.

So, it gives us immense confidence during sideways movements and not such great times and more volatile times if you are able to do well and during good times the AUMs also increase because of the market movement and also due to the sentiment where people want to invest more money. So bad times, penetration and references become higher and other two growth verticals do very well during great times. So both - two correlated variables help you during opposite times. So that's why you see almost about 106% jump in our net mobilization numbers for the first half year.

Page 2 of 14

	Anand Rathi Wealth Limited
	October 14, 2022
	And of course, you would have read that we had a great increase in our client base in terms of
	year-on-year, we've had a growth of 19% in terms of client addition and we are inching towards
	our target of 10,000 Crore families in a calibrated fashion and the pace of client addition is seeing
	a very sharp tick as well.
	On the Digital Wealth vertical, the AUM has increased by about 23% to Rs.949 Crores which is
	a business which helps us standardize and scale it using the help of technology, also helps us be
	embraced with the changes in technology which can be there in our business on the Private
	Wealth side as well. And clients have grown by about 14% year-on-year to 4,065 clients in the
	Digital Wealth vertical.
	The OFA business is a strategic extension for capturing wealth management landscape to service
	retail clients through mutual fund distributors by using a SaaS platform or providing them
	technology platform. As on 30th September, we had close to about 5,500 mutual fund distributor
	associated with us with asset under administration and reporting of about Rs.85,900 Crores,
	which we currently only monetize as a subscription fee, but later in the life of this business when
	we find appropriate could be an important monetizing tool. So, I personally think that. I will stop
	here and I'll request Mr. Jugal Mantri to say a few words and take us through the financial
	numbers as well.
Jugal Mantri:	Thank you very much Feroze bhai. Good afternoon to all. Let me also first begin with the happy
	note to share that the Board of Directors has declared an interim dividend of Rs.5 per equity
	share which is 100% of the face value. This is in-line with the company's endeavor to regularly
	reward its shareholders.
	Despite all the external challenges, the company and its subsidiaries have boosted strong
	performance for the quarter and half year ended September 2022, backed by an overall
	improvement in operational efficiencies. Our consolidated AUM as on 30th September, 2022
	stood at Rs.35,842 Crores which registered a growth of 16% Y-o-Y and 9% Q-on-Q. Our
	consolidated revenue for the quarter ended 30th September 2022 stood at Rs.138 Crores as
	against Rs.104 Crores in Q2, FY '22 registering a growth of 33%.
	While revenue for first half in financial year 23 stood at Rs.272 Crores as compared to Rs 202
	Crores in the previous first half of financial year 2022, registering a growth of 34%. Our PBT
	for the quarter stood at Rs.58 Crores, registering a growth of 40%; whereas PBT for H1 FY '23
	stood at Rs.110 Crores, registering a growth of 37%.
	Our PAT for the quarter stood at healthy Rs.43 Crores registering a growth of 41% as compared
	to Rs.30 Crores in Q2 FY '22. PAT for H1 FY '23 registered a growth of 37% and it stood at
	Rs.83 Crores. PAT margin stood at 31.1% in Q2, FY '23 and 30.4% in H1 FY '23. EPS, earning
	per share for Q2, FY '23 stood at Rs.10.3 per share and for first half FY '23 stood at Rs.19.8 per
	share, registering a growth of 41% and 37% Y-o-Y respectively.
	Return on equity for first half ended 30th September, 2022 stood at a healthy 43% which was
	41.7% in financial year FY '22. Another area where we witnessed strong momentum was the
	addition in number of client families. We have added almost 1,250 client families compared to
	same period last year. Our total client families as on 30th September 2022 stood at 7,928. In the
	last 12 months we have added 37 relationship manager on the net basis. We continue to remain
	Page 3 of 14

	Anand Rathi Wealth Limited
	October 14, 2022
	optimistic about the business potential and will drive towards our vision, while assisting our
	clients achieve high quality experience in the journey of wealth solution.
	With this we will now open the floor for questions-and-answers. Thank you. Over to you Rutuja.
Moderator:	Thank you very much. We will now begin the question-and-answer session. Anyone who wishes
	to ask a question may press star and one on the touchstone telephone. If you wish to remove
	yourself from the question queue, you may press star and two. Participants are requested to use
	handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the
	question queue assembles.
	The first question is from the line of Rohan Mandora from Equirus Securities.
Rohan Mandora:	Congratulations on good set of numbers. So, my first question was on the gross enclosed, if you
	could share what was the gross enclosed for the quarter and split it across equity debt MF and
	the primary and secondary MLD issuances?
Feroze Azeez:	Gross or net you mean?
Rohan Mandora:	Gross. Gross and net both essentially.
Feroze Azeez:	We only look at net because mutual funds when they exit one fund and they're recalibrating their
	portfolios to our model portfolio there could be very large gross numbers, right? In a mutual
	fund, if I have five schemes, which I'm changing three then the gross number will be very
	deceptive. So net number, I can give you some color on that and gross number is very, very
	distorted. Does that answer? Of course, from the MLD standpoint gross numbers and net
	numbers can be given to you and I'm sure Jugalji and Rajeshji will be able to add there.
	So now coming to the net number which is almost about Rs. 2,500 Cores for the first half year,
	a large portion of that which is almost two-thirds of it, goes into equity mutual fund because we
	believe that when markets fall and if you've seasoned your investors to expect a market fall
	because that's the nature of the beast, they don't look for reasons for the fall, but they are in a
	hurry to actually take actions.
	So last six months markets average has been lower than they were in the previous six months.
	Hence, we had a net mobilization, largely in the equity mutual fund side, of almost about
	Rs.1,500 Crores to Rs. 1,600 Crores. And from an industry standpoint, if you leave SIPs out, the
	total net mobilization in the equity mutual fund has been Rs. 79,000 Crores for the first six
	months and if you leave the SIP number of average Rs. 12,300 Crores then the total net
	mobilization in terms of lumpsum which is the business we are in, unlike several other
	aggregators was total about Rs. 6,000 to 7,000 Crores out of which Rs. 1,400 to 1,500 Crores
	or even little more, has been our market share in terms of net mobilization and gives us immense
	pleasure because we are buying low and creating a potential for higher return for our clients.
	Otherwise, it's an academic statement to buy low. Jugalji, if you may want to add a few points
	and if there is some gross numbers, which Rajeshji will have on the MLD side.
Jugal Mantri:	No, you are bang on with the numbers, in the first half we have added about Rs.1,650 Crores in
	equity mutual fund and there was some exists in debt of about Rs.200 Crore, so net addition was
	about Rs.1,500 Crore in mutual fund. And in case of MLD there was addition of about Rs.725
	Crore and small addition was there in other products to the tune of Rs.300 Crore. So all put
	Page 4 of 14