In an interaction with Feroze Azeez, Deputy CEO, Anand Rathi Wealth Limited

Inflation coming down, bond yields falling, lower interest rates, robust GST collection, and improved direct tax collection, all indicating improved corporate earnings growth and in turn market returns, asserts Feroze Azeez, Deputy CEO, Anand Rathi Wealth Limited

In Q1FY24, the company reported a 34 per cent jump in net profit. What were the contributing factors to the company’s stellar performance? 

We have seen robust growth across the business parameters –AUM, Revenue, PAT and number of clients. Our AUM grew by 32 per cent Y-o-Y to Rs 43,413 crore and mutual fund AUM increased by 36 per cent Y-o-Y to Rs 15,342 crore as on June 30, 2023. The number of active client families grew by 17 per cent Y-o-Y to 8,747. This has resulted in 34 per cent Y-o-Y growth in both total revenue, as well as in PAT. 

With the market making continuous highs, what is your outlook on the Indian equity market in the short to medium term? 

India’s growth story is greater than average. At 6.1-6.5 per cent GDP growth forecast for FY2023-24, India would be the fastest-growing major economy. Inflation coming down, bond yields falling, lower interest rates, robust GST collection, and improved direct tax collection, all indicating improved corporate earnings growth and in turn market returns. With inflation expected to be around 5 – 5.5 per cent, nominal GDP growth would range around 11-12 per cent for FY 2023-24. In the past, a similar level of GDP growth, on average, resulted in Nifty 50 return of 11-12 per cent. The downside risk from here on is far lower compared to the upside potential.

As the markets reach new highs, an increasing number of people are eager to invest additional funds. Where is this newfound wealth originating from? Does it primarily come from your existing clients or are there a significant number of new clients being added from tier 2 and tier 3 cities as well? 

It is a mix of both – new money comes from existing clients as well as new clients. Around 70 per cent comes from existing clients and 30 per cent comes from new clients. We, as a wealth manager firm, have this clear display of confidence in action by not forcing a client to start big with us. Though our client segment is Rs 5 crore to Rs 50 crore in balance sheet size other than the homes they live in, we don't force the client to start with Rs 5 crore. We tell clients, to start with small amounts and merits will help us penetrate into your wallet. And if we are not doing lip service, then it is obvious that they will give us more money. We have a presence in 15 cities across India and an international office in Dubai. 

What are some of the emerging trends you are witnessing in wealth management? 

We have not seen any significant change in the behaviour of our clients segment i.e. HNI families with investable surplus of Rs 5 crore to Rs 50 crore, in the last many years. Financial markets have become complex due to a wide variety of investment products and with a challenging macro environment, the need for professional wealth managers has been increasing. The number of US millionaires are expected to more than double at a CAGR of 15.7 per cent from 7.98 lakh in CY2022 to 16.57 lakh by CY27 (source: The Wealth Report 2022 – Knight Frank), most of the increase will be driven by young Indians getting wealthier.

With the company currently present in more than 15 cities, can you elucidate the plans to expand the geographical reach?

With respect to geographical expansion, we follow the ‘Bharat’ story. Many of our seasoned relationship managers (RMs) are from smaller towns and soon they will be relocated to their hometowns. Their regional background will help us tap into smaller towns which are highly underpenetrated markets with immense opportunities for wealth management. With the same logic, recently we have expanded and opened offices in Nagpur, Coimbatore, Vishakhapatnam and Ahmedabad. However, we are going to always expand in a calibrated fashion because we will make sure that, the brand promise of uncomplicated and client-centricity is actually delivered. 

At the moment, what are your top 3 strategic priorities? 

Following are our top 3 priorities -  

• To grow our AUM by increasing the satisfied client base and by gaining a higher wallet share of existing clients. 
• To grow our entrepreneurial team.
• Reward our shareholders.