Anand Rathi Wealth Ltd

NSE:ANANDRATHI

Earnings Call Analysis

Anand Rathi Wealth Reports 32% Revenue Growth and Increased Guidance

In Q2 FY '25, Anand Rathi Wealth saw consolidated revenue reach INR 250 crores, marking a 32% year-on-year increase. The profit after tax was INR 76 crores, also reflecting a 32% growth compared to last year. For the first half of FY '25, total revenue grew by 35%, totaling INR 495 crores, with a profit of INR 150 crores. The company's revised revenue guidance for the full year increased from INR 910 crores to INR 980 crores. The wealth management division successfully attracted 1,066 new client families, maintaining a low client attrition rate of 0.28%.

Strong Revenue Growth in Q2 FY '25

Anand Rathi Wealth Limited reported consolidated total revenues of INR 250 crores for Q2 FY '25, marking a robust 32% year-on-year increase from INR 189 crores in Q2 FY '24. Profit after tax (PAT) followed suit, achieving INR 76 crores, which also reflects a 32% growth compared to INR 58 crores in the same quarter last year. The PAT margin remained relatively stable at 30.6%.

Half-Year Performance Shows Health

For the first half of FY '25, total revenues reached INR 495 crores, up 35% year-on-year from INR 368 crores in H1 FY '24. Rail revenue experienced a staggering growth of 70%, amounting to INR 195 crores. PAT for this period rose by 35% to INR 150 crores compared to INR 111 crores last year, with a margin of 30.2%.

New Growth Guidance and Impressive Net Flows

In preparation for future growth, Anand Rathi increased its revenue guidance to INR 980 crores from INR 910 crores and raised the PAT guidance to INR 295 crores from INR 280 crores. During the first half of FY '25, net flows surged by an impressive 128% year-on-year to reach INR 5,700 crores. Equity mutual fund net inflows contributed substantially to this growth with a rise of 64% to INR 3,116 crores.

Client Base and Employee Stability

The company successfully added 1,066 new client families, boosting the total count to 10,977. Maintaining strong client relationships, Anand Rathi reported a low attrition rate of 0.28%. The firm has expanded its workforce by adding 63 new relationship managers, yielding a total of 374, with an impressive zero 'regret' attrition among high-performing relationship managers.

Performance of Digital and Structured Products

Anand Rathi's digital wealth management segment saw a year-on-year growth of 32%, reaching INR 1,826 crores. Structured products are also gaining traction, and the company anticipates realignment across asset allocations in response to market trends. The guidance reflects an optimistic outlook for increased allocations to structured products in the coming quarters.

Market Positioning and Competition Insights

Anand Rathi has established a robust position in the wealth management sector, with a reported 1.5% market share in net inflows including a total of INR 3,116 crores. The executives acknowledged increased competition in the market, stressing a continuous focus on delivering superior risk-adjusted returns and maintaining strong client relations.

Yield Analysis and Future Considerations

The company reported yields of 1.08% on equity mutual funds and 0.43% on debt instruments, with structured products yielding an average of 1.17%. As part of their growth strategy, the firm aims to sustain these yields, navigating potential pressures from competitor adjustments in compensation structures. Management remains optimistic about the investment landscape and the company's adaptability to market dynamics.

Earnings Call Transcript 2025-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the Anand Rathi Wealth Limited earnings conference call for Q2 and H1 FY 2024 to '25. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Feroze Azeez, Deputy CEO of Anand Rathi Wealth Limited. Thank you, and over to you, Mr. Feroze.

[Feroze Azeez, executive]

Good afternoon. Thank you, Sajal, for giving me the opportunity to talk to the audience. Good afternoon, and thank you, everyone, for joining us for the earnings conference call for the quarter and half year ended 30th September 2024. With me, I have our Group CFO, Mr. Jugal Mantri, our CFO; Mr. Rajesh Bhutara; and our Head of Investor Relations, Mr. Vishal Sanghavi.

In H1 FY '24, our consolidated total revenues grew by about 25% year-on-year, to BAT INR 495 crores and profit after tax grew 35% to INR 150 crores. We have revised our revenue guidance to 980 from 910, and we have revised our flat guidance from 280 to 295. The mutual fund revenue registered a stronger growth of about 70% year-on-year to INR 195 crores of the INR 495 crores in H1 FY '25. Total AUM grew by about 57% year-on-year to reaching about INR 75,084 crores. And since our guidance was INR 72,000 crores for the full year, and we've crossed that number. So we are giving a new guidance of about INR 80,000 crores with got [indiscernible].

During H1, our total net flows registered a remarkable year-on-year growth of about 128%, reaching INR 5,700 crores for a 6-month period. Equity mutual fund net inflows achieved a year-on-year growth of about 64% to INR 3,116 crores. Share of equity mutual funds in the AUM increased to 55% from 50% at the same time last year. Return on equity on an annualized basis stood at about 44.4% for the first half year of FY '25. In alignment with our policy, rewarding shares, we have declared an interim dividend of about INR 7 per equity share for FY '25.

Now in our flagship private wealth business in the first half of FY '25, we've added 1,066 new client families on net basis, bringing our total number of clients to of 10,977. Our client-centric approach has resulted in 0.28% client attrition rate for the first 6 months of this year. We have added 63 new relationship managers over the past 12 months from September last year, bringing the total count to 374. We have had an impress immense pride in achieving 0 regret RM attrition the fifth consecutive quarter, which is about 15 months period, no regret RM attrition, regret RM by which I mean any RM which has crossed INR 40 crores of AUM has not let up in about a 15-month period. Digital wealth businesses, which is a B2B2C business registered a growth of about 32% year-on-year to reached INR 1,826 crores. The number of clients increased 22% to 5,454, OFA business, which is an abbreviation to omni financial adviser which is a SaaS platform has 6,188 subscribers with platform assets of about INR 1.55 lakh crores at the end of H1 FY '25. This means the mean of the year-on-year growth, very distinguished the data, the little differentiated data, so I want your attention. For the last 10 quarters, our profits have grown on a year-on-year basis the mean growth has been 33.9%. The median growth is 34.2%. The standard deviation of these 10 quarters, quarterly growth -- year-on-year growth is 4.5%. Our performance has been consistent and also market agnostic is the belief we have. How do we check market agnosticity. If you look at the worst Misty performance after we've got listed was in the quarter 1 FY '23, where the lift fell about 9.6%, which was April to June 2022. Our profit in that quarter on a year-on-year basis grew almost to the mean, which is 33.6%.

Now I will hand over the call to Mr. Jugal Mantri to take us through the financial performance of the company in more detail. Jugal, sir, over to you.

[Jugal Mantri, executive]

Thank you, Feroze. Thanks, Ed. First, let me speak about Q2 FY '25 consolidated financial performance. Our consolidated total revenue for the Q2 FY '25 stood at INR 250 crores compared to INR 189 crores in Q2 FY '24, registering a 32% year-on-year growth. Trail revenue was INR 106 crores in registered a strong Y-o-Y growth of 69% from INR 62 crores in last year same quarter. Our profit after tax stood at INR 76 crores registering a 32% Y-o-Y growth compared to INR 58 crores in Q2 FY '24. Profit after tax margin for Q2 FY '25 was at 30.6% as compared to 30.5% for Q2 FY '24, which was slightly better.

Now I will take you all through first half of FY '25 financial reason. The revenue for first half FY '25 stood at INR 495 crores compared to INR 368 crores in H1 FY '24, registering a 35% healthy year-on-year growth. Rail revenue was at INR 195 crores, witnessing a strong growth of 70% year-on-year. Profit after tax also grew by 35% year-on-year to INR 150 crores for H1 FY '25 compared to INR 111 crores for H1 FY '24, and profit after tax margin was 30.2% for H1 FY '25.

So this is all on the financial numbers. Over to you, [indiscernible].

[Operator]

[Operator Instructions] The first question is from the line of [indiscernible] from Unicorn Assets.

[Unknown Analyst]

Good set of numbers. My first question is, can you explain the different what are the use of different product segments, like could EMS, MP, NSP and others?

[Feroze Azeez, executive]

Sorry, your voice was a little muffled. Go again. I'm so sorry.

[Unknown Analyst]

Yes. It's good now?

[Feroze Azeez, executive]

Yes, it's a [indiscernible] like that.

[Unknown Analyst]

Okay. So could you explain on the yields on the free products like equity MF, debt, MS, NSP and for us?

[Feroze Azeez, executive]

Sure. The yields are -- on equity mutual funds, about 1.08%, 0.9% post GST on a yield basis, yields are always computed per annum. So if you look at the yields of all the mature structured products, which is greater than 1,500 over the last 12 years, the yield has been 1.17% calculated per annum on average adds on structured products and then coming to debt, debt is about 0.43 post GST is the yield on the debt.

[Unknown Analyst]

Okay. And what's the part that others in?

[Feroze Azeez, executive]

The others is practically raw material because we believe in these 3 instruments, largely equity mutual funds and structures, which is what intergenerational all of our debt is also in a smaller portion. Others is just -- our assets, which are in custody now, as raw material for its alignment over a period of 6 months, 1 year. So other is something which we don't track the yield because that's not what we recommend, but those are broker-cotransfers of PMS and all products which are in pipeline to get aligned into the 3 products which I stated.

[Operator]

The next question is from the line of Lalit Deo from Equirus Securities.

[Lalit Deo, analyst]

Congratulations on a good set of numbers. So sir, first question was broadly on the industry front. Like we have been hearing that a large AMC has tried to cut the distributor payouts on the back book on the back book on the back book of. So have you received any such kind of intimation. And just a follow up on this, like in such cases, like how should we see it see to it that our yields remain constant in this scenario?

[Feroze Azeez, executive]

Yes, some AMCs might have tried to try to reduce the yields of the distributor, where the TERs have come down because of mark-to-market. But since we are the only wealth management outfit in the country, for sure. which uses only equity mutual funds or long-only position. We don't -- we have not sold 1 PMS. We've not sold direct equity. We have not sold AIF long only. We stand apart in terms of only using mutual fund platform for long-only positions because we think that's far better that ratio than most other equity participation vehicles. So our bargaining power is significantly more because we have only 1 platform. And I think that's the reason why you would not see a dip, and that's why you see a 70% increase in trade in spite of this pressure, which does not impact us as much or not at all.

[Lalit Deo, analyst]

And secondly, sir, just like -- so while the net flows in the equity mutual fund have remained steady, but it has declined on a sequential basis, whereas on the -- in the industry front, like if we look at the equity flows in the equity mutual fund, so they have remained elevated, they have increased also like on a sequential basis. So like anything to look into it, like why has been there a decline in the net flows on a Q-o-Q basis, I would say.

[Feroze Azeez, executive]

Very good question, [indiscernible]. But now that we've been listed for about 12 quarters. I'm trying to reiterate how you should look at our business, whoever wishes to keenly look at our business and seriously wants to understand this business, which I'm sure you do well in. See this business is about 1,977 portfolios. The clients' objective risk reward. And whatever is the allocation is a culmination of an allocation, which is bottom up as an topped. What do I mean by that is if my total INR 5,700 crores is the net sale for the first half year, if markets are not I'm duty bound to realign one's portfolio towards structured products or vice versa, depending on which -- what -- which asset has a larger mark-to-market, for example, if you have first April 2023, if you look at our results, the structured product proportions were 29%, if I'm not wrong. Now it might be 23%, 24%. [indiscernible] the correct number. Proportionate?

[Unknown Executive]

24.66.

[Feroze Azeez, executive]

24.66. Now what happens is, why is this proportion come down because there is more mark-to-market in equity mutual funds because our model portfolios outperformed lift by 16.8% last year. And it has outperformed as invested by 66.09% on Nifty. So when I reallocate money from equity mutual funds to structure products for a client who had agreed to have 65, 35, it might have changes in the allocation from a sequential quarter-on-quarter basis. So having said which, to answer your pointed question, what does this imply? This implies that there is some degree of realignment happening because of higher mark-to-market. So you if you look at my net sales, which is what we were aspiring to have INR 1,000 crores per month, did we get there? The answer is no. We got somewhere close to that 5,700. Ideally, I would like to see what 6,000. Does it answer your [indiscernible]?

[Lalit Deo, analyst]

Yes. But that would be on the overall front. I was more talking about the -- in the equity segment itself like equity mutual fund schemes.

[Feroze Azeez, executive]

Let me further elaborate for us 30 more seconds. Now if I am at 24.6 of structured product, if the agreed allocation is 29% before the mark-to-market that implies that 4% to 5% needs to move back to structured product, right? If I have to restore the allocation of usable 2023 with a specific client. So it might mean that I might sell some mutual funds and buy structure products or vice versa depending on the mark-to-market is what I was trying to help you understand, and you should look at the overall asset perspective because it is bottom-up rather than top-down. I don't sell mutual fund thinking in a mutual fund business. I don't sell structured products painter product base. You're creating the portfolio and allocations are an outcome rather than our input.

[Lalit Deo, analyst]

Right. Right. And sir, just last 1 data keeping question. Like in this quarter, like what has been our primary and secondary issues in the [indiscernible] side.

[Feroze Azeez, executive]

Jugal, sir, would you want to take that? Or should I? It is not for primary right. 32.83 is primary for 6 months full period and secondary, 950.

[Lalit Deo, analyst]

Sure, sir. And sorry, just last question. Like has there been any change like post the taxation rate post the tax gain what is the current tax rate, which we are is there under LDs?

[Feroze Azeez, executive]

The tax rate does not impact by such a product business because the sharp ratio of the structured product is 1.93. Okay? Out of the 16 products, which are there in wealth management, if some -- and there are about 15,000 plus ISINs, which a client can cut a check through. If you look at adding them in the descending order of a ratio post tax of pretax. You will see structure products right on top, the ones which we made. So 1.93 is the sharp ratio of structured products. The next best is mutual funds, 0.78. That's point which I'm saying. So does it change our product allocation? The answer is no. Second is that you look at taxation. Taxation is always at file level. And the great part of Section 5 is that it counts all the gains as short-term capital gains. And shorter capital gain gives you the provision to use Section 170 to Section 74 for any setoffs which an equity loss can throw up. So having said which, the average taxation at a family level, which we believe is about 19%, 20% for the maturity, which have happened after the tactic.

[Lalit Deo, analyst]

Okay. But in general, like if you talk about only the structured product, then I was just trying to refer.

[Feroze Azeez, executive]

No problem. Okay. Now let me elaborate further. Unfortunately, I'm trying to compress an answer, which is an art discussion with the client to about 30 seconds, 5 seconds. But yes, having said which, with that limitation, let me give you 1 more data point. In India's new tax regime, which is a new tax regime, even if you earn 50 lakhs, the post-tax, post tax -- of tax rate on a graded fashion if we put it on an exit. So if there is a gain of INR 50 lakhs, as per the new tax labs, if I don't take any provisions of those section ADCs and those 2 provisions of Section 8. If you put on a weighted average basis, even if there is a INR 50 lakh gain, 49 lakh gain, the weighted average tax was up to 24% and not 35%. And in a family of 5, you would always have a filing, which is a major file, which does not have a clubbing provision under the 65 -- Section 65. So it's a longer story, Lalit. So as a stand-alone also, it's not something which can be at a product level, it's at a high level, including all provisions and family. That's the point I'm trying to make I can take this 1 on time in a meeting or something like that and help you understand what the Section 6 I say, what does Section 94 subsection say, what does section 70 to 74 say, Section 1120 and 1116.

[Operator]

The next question is from the line of Krishna from ULK.

[Unknown Analyst]

Am I audible?

[Operator]

Yes, sir, you are audible.

[Unknown Analyst]

Great to see that the numbers are spiking year-on-year. My question is not so much around the numbers, but it is around people management, if I may say so. I do see that for the last 5 to 6 quarters, there's been 0 attrition in your organization. I don't think this is very intriguing for me to begin with. So because when my relationship manager calls me from my bank by the time I add him to my contacts, he's already switched shops. So I don't know whether this is business as usual in Anand Rathi, but this -- I find this to be a little fascinating. So I would appreciate if you could give me some insights there?

[Feroze Azeez, executive]

Sure, Mr. Krishta. Point one, yes, but I would want to clarify, it's not 0 actuation at a company level, we have 1,157 total colleagues at current point in time. The attrition is regret RM attritional 0 for 15 consecutive months. That's point one. Point 2, we basically believe that RM is the easiest to retain. Because it is -- unless you do something wrong, RM does not need to start his life back from 0 in a new platform. And be about 10, 12 years back, Rakesh are I and some of our colleagues had discussed why we quit the previous company. And then we realize there are about 5, 6 reasons why a person needs to change the job. Now this is my third job, unfortunately. My first job was [indiscernible], spent 7 years and there was a reason why I left [indiscernible] because they told me to sell insurance, and I was not okay with it. So if you can make sure that those 5, 6 items are not done in a company, then people don't lease is our belief, and that's the hypothesis, which is proof point one. Because an RM needs to convince 50 clients, 30 clients to come along, which is a tough task, especially when the client portfolio, if you look at our client portfolio, the sharp ratios for the last 10 years of my 297 largest client is greater than the best sharp ratio of another competitor, okay, mathematically improvable. So it what I'm trying to say is this was RM regret maturation is 0-point one. Point 2, RM find it very difficult to restart life. Unless the organization is being very unfair, there is no reason why silos as an RM should go to a new platform and we will live from 0. And we just have identified those 5 things, which industry does wrongly. And that we don't do. That's about it. We don't do anything extra. We don't do contest. We don't give RMs more than what is said. We don't give them less than what I said. We give them exactly the same formula for from 2007 when Rakesh set up the bonus formula or the remuneration formula that's remained constant for 18 years, 17 years, which has not happened in tender. So that's 1 of the key reasons stability of remuneration is 1 of the 5, 6 reasons. Why this is the way it is. And we want to be the Finland of the corporate world, which is the happiest country as we take.

[Operator]

The next question is from the line of Samar Kesha from Sameeksha Capital.

[Unknown Analyst]

Yes. Am I audible?

[Operator]

Yes, sir, you are audible.

[Unknown Analyst]

Congratulations on a good set of numbers. I just want to know of Alfa generated on our model MS portfolio. So can you just throw some light on that?

[Feroze Azeez, executive]

Sorry, again missing your question with some detail.

[Unknown Analyst]

So Alfa, Alfa generated on our model portfolio.

[Feroze Azeez, executive]

Yes. Alpha generated on model portfolio. We like to compare ourselves to lift because that's the most familiar benchmark. If you look at NII, of course, some people might debate why not NSE 500, why not [indiscernible]. But 50 is what the Tier 2 benchmark most fund managers in India have chosen, and that's up on benchmark as well. Then given the choice, most fund managers is actually on surprisingly, even small cap fund managers have chosen 50-50. The Tier 2 benchmark, Tier 1 is many. Coming back to now the alphas, I gave you some color on the benchmark because the benchmark has to be something which is familiar 500, my clients don't even know the levels of it. Coming to last year, I think 16.88% like I said, with the Alpha met of our model portfolio. We went small cap heavy. We were [indiscernible] schemes in December, in March 2020 to '23 on first April 2023, we were suddenly 3 small cap ones. So we have a small cap for 4 years with whatever has got rate and some degree of mathematics. We have decided that we will be out of small cap just before -- or no, just after the ILFS crisis in September 2018. So we stayed without any small cap portfolio. then we went straight to 3 small cap schemes. Now we have 2 small cap schemes, and that really resulted that whole broader market call with God Grace went, right? And that gave us some serious alpha last year. And then this year, of course, the liquidity in the small cap space continues, and we track that on a daily basis, and that's why there's a broader market badly continuing unlike most of these institutions several institutions believing that it's broad-based rally is overdone till the liquidity tie terms, we believe that there is some more juice left. And so the alpha this year, not to tell you the precise number, I tell you as of yesterday bear with me for a minute from you precisely as today. It is 7.3%.

[Unknown Analyst]

Okay. Copy that.

[Feroze Azeez, executive]

It is 7.34 for [indiscernible] for this financial year.

[Unknown Analyst]

Okay. Great. And my other question is like we have seen increase in finance cost this quarter. So is it like a one-off, item on account of buyback or anything else?

[Feroze Azeez, executive]

Yes. Jugal, sur, best equipped to answer that.

[Jugal Mantri, executive]

So actually, see, if you recall that we have done the buyback, and the treasury were deployed. So now whatever this finance cost is there, it is -- there is no borrowing we have. In fact, we have got the other income and the fixed deposits are placed. So as and when there is a treasury requirement is there. There is an overrun on the FD line. So it is FDD used. And the cost is largely on account of that. We don't have any borrowing in the company is a debt-free company.

[Unknown Analyst]

Yes. Got it.

[Jugal Mantri, executive]

Does that answer your question?

[Unknown Analyst]

Yes.

[Operator]

The next question is from the line of Aman Singh from Profit Gate Capital Services.

[Unknown Analyst]

Am I audible?

[Operator]

Yes, sir, you are audible.

[Unknown Analyst]

Congratulations on a good set of numbers. Sir, I wanted to understand, as you rightly highlighted, Y-o-Y decline on equity net inflows for the quarter 2 is due to the realignment of portfolio towards structured products. So can you give us the gross inflow numbers in equity so for a better comparison of how the book is going and also for the market share that we have in the industry?

[Feroze Azeez, executive]

Aman, 1 second. [indiscernible] the industry. In the meantime, 1 of my colleague pulls out precise numbers and tell you. If you look at our equity mutual fund sourcing for the first half year, I think it's about 3,300. I'll tell you some industry numbers. Now here, I have it in my hand, H1 FY '25, the net flow in the category as per rig. Category 3 of AMC, as it is mentioned in the website, which is the active managed funds. The total net flow is 94 IP purchases for the same period of H1 FY '25 is INR 1,339 crores. Net inflows minus the FIP purchase is INR 7,069 START -- and Anand Rathi's number, sorry, is 3,116. And our IT purchase is which implies that our net inflow in equity mutual funds for the same period of the first half year of 2020, FY is INR 2,805 , which makes it a 4% market share in lump-sum purchase and 1.5% market share, including a title number because we have not focused on SIP being an HNI platform. I think we have missed that opportunity so far. We have woken up to that opportunity, and we will see a pig numbers going up. But if you look at lump sum purchases, INR 2,800 crores is what has come from ARW on a total base of 7,000 for into. Does that answer Aman, sir?

[Unknown Analyst]

And sir, what would be the gross equity inflow market share, including SIP lump-summing for H1?

[Feroze Azeez, executive]

For the industry or for us?

[Unknown Analyst]

For us compared to industrial market share.

[Feroze Azeez, executive]

Yes, the market share is 1.5. 3,116 on the INR 2 lakh, INR 3,994.

[Unknown Analyst]

So it could be net inflow market share, right? I'm asking about gross and for market share.

[Feroze Azeez, executive]

Cross inflow, we don't track it at all across.

[Jugal Mantri, executive]

So it is too impossible to track because there are a lot of switches from -- and the realignment even within the equity mutual portfolio. So it is next to impossible to track the gross numbers. Besides the equity, what is important is that even the net inflow in the first half, which we have is INR 5,700 crores in the products which are being distributed compared to that, we had net inflow of INR 2,500 crores. So in fact, the net inflow in our products, which are being advised, it has gone up by 127% in the first half of this financial year.

[Unknown Analyst]

Right. Right. Yes. So as you explained in quarter 2, there was some realignment from the equity measurement to structured products. So -- was it across the categories in equity mutual fund or you made redemptions from a particular category, like you did in small cap a few quarters back?

[Feroze Azeez, executive]

Yes. We -- no, no. See, we released a new model portfolio every 15 months. okay, then start the realignment, okay? The modern portfolio is a lump sum now the same 4 on, the same 14 schemes, my largest client as an RM phones. So it is never going to be so transactional.

[Operator]

The next question is from the line of Dipanjan Ghosh from Citi Group.

[Dipanjan Ghosh, analyst]

Just on the guidance part, when I look at it for the second half, you have built in almost high single-digit sort of AUM growth guidance compared to 1 when I look at the accretion. But when I look at the revenue numbers or even when I look at your PAT numbers for the second half, we are building in a tad lower than what we have achieved in wanted. Now given that OpEx structure probably when I subtract and gets the OpEx number, but the 1 seems to be broadly flattish what you're assuming between 1 and 2 just on the revenue part, I mean, why would you kind of assume a relatively lower revenue number for the second half compared to the first half, even when you are assuming AUM accretion. That's my question number one. The second question is now when I look at your flows that you're getting into your business, just if you could give some color between flows from, let's say, the new customers and from the existing customers, what the breakup would be an [indiscernible] in the last year or quarter out there. And my last question is more from a structural perspective. I mean, in the segment that you're operating, do you see increased competition from some of the domestic boutiques. And if so, can that lead to some sort of maybe not immediate but near a near- to medium-term pressure on the cost side?

[Feroze Azeez, executive]

Great. So firstly, from a guidance standpoint -- sorry, I missed your name.

[Dipanjan Ghosh, analyst]

Dipanjan.

[Feroze Azeez, executive]

Thank you, Dipanjan, for your question. Firstly, I think if you would have heard us in the past, we always try to under-commit and over-deliver. That's our principle. And that's the principle any business which is supposed to be in the trust business. 2 clients also, we try to undercommit and try our best to overdeliver. We don't show Sensex 200,000 and then sell equity. We source Senses can go down. every 8 months, 10% in mental equity. So 1 is the principal and the DNA, which Mr. Rakesh Raval, who's the CEO of our company and incidentally also our professional crew has invited in us is to under-commit overdeliver. So any guidance numbers have to be seen with that color. And we also believe in guard. So there could be surprises. That's why you will always have some form of better and not look at sequential growth. half year to half year growth are not supposed to be seen in this business for the time, and I'm mentioning this in my calls that it is a business of managing money. And revenue is an outcome. I can't decide this is the revenue I want, and that's how I will manage them on, okay? And we have to respect the fact that we have collected INR 75,000 crores of hard earned monies, which on average, takes 15, 20 years for every family to accumulate. So revenue can't result in the locations allocations have to result in drive. So that's on the guidance part right?

Second, which was first question was existing vis-a-vis new client. 65 old clients and 35 new clients, okay? We believe that we are 1 of the wealth management outlets like to believe that we are more secure as a group of professionals saying that we don't push people to start big. We will start with whatever, INR 1 crore. But as long as you have INR 10 crores, INR 15 crores as your investable surplus, I would allow somebody to start with INR 1 crore earlier is to allow them to start with 5 million also. And once I establish that my shop ratios, the world shop ratio is better than the best shop ratio of somebody else. There is no reason why I will not be able to consolidate. That's why 2/3 comes from existing clients and 1/3 comes from new clients.

And the third question was what is?

[Dipanjan Ghosh, analyst]

[indiscernible] more on the competitive intensity, how the are shaping up?

[Feroze Azeez, executive]

Competitive intensity or competition with anybody who has a sharp ratio less than me, okay? There are 2 -- how we see competition, of course, it might look idealistic. There is a competitor to sales team. There is a competitor to research. Now for example, if there is anybody better than us in terms of risk reward to a client, that is a competitor to my product team, Mr. [indiscernible], 145 people saying that why is somebody delivering a better shop ratio [indiscernible]. If somebody is delivering worse of the me, then it's a competitor to my sales [indiscernible]. Because [Foreign Language]. So that's how we see and we learned from our competitors. So to answer your question, competition will come. but there is enough and more money, which is not delivering the sharp ratios or even 0.5 and people don't even measure risk-adjusted return of that portfolio. So if you measure and somebody is doing very well, better than us, we don't treat that as competition. We let that be. And so we have the courage to say no to some clients, which I don't think wealth management outlets at the client. Once I say no to those 5% people who are doing better than us and learn from them, I have the conviction to get the 95, and that's been the principal that's how we see competition. And there is so much underutilization on a risk-reward basis, you'd be surprised, even INR 100 crore clients have a shop ratio of 0.3. So many of them.

[Dipanjan Ghosh, analyst]

If I can come back on the first question on. My question was not for radio you have moved from the perspective that banning asset allocation, if I just look at your metal fund distribution business, do you see any risk to the. I think 1 of the first questions was regarding the back book repricing from 1 of the larger aims. I mean, is that more of a trend that you expect on the other incumbents to follow? Or it's just more of a one-off even from 1 of the larger players. I mean, a question more from a yield perspective, how you see that shaping up? Or is there any risk to the MFC?

[Feroze Azeez, executive]

We personally think that we generally like to manage risk. Risks will be there. There is -- I can give you that not just the end risk which I've done on my notes in my phone, there will be some unknown risks and risks are practically the ones which you don't see coming, right? So I have total '17, I call the green basis higher likely risks are -- so after having provision, that is why Rakesh travel gives the guidance of 20%, 25% for the next 10 years. To answer your first question, yield compression, unlikely. We were the only wealth management or 1 of the few wealth management output, which went all trained in 2016 when it was regulatorily mandated. And we have not had to change our distribution and advisory model from 2013, 1st January when it has been released. Most of our industry participants have had to be doing between advisory distribution PMS platform for the mutual fund business. I think if I'm not wrong, at least 3 changes have happened in most wealth management outputs from 2013 in their business model. When we look at regulation, we look at regulation, not from what is written, but between the lines. and probably on a one-on-one discussion. I can tell you what we read as a regulatory change. Yield compression is the least of our risk and even if there's a 57 risk of having 1% only trade commission, we are very well poised to handle that.

[Operator]

The next question is from the line of Prayesh Jain from Motilal Oswal Financial Services.

[Prayesh Jain, analyst]

Yes. Congrats on at great set of numbers. Just a couple of questions. Firstly, when you were mentioning about your IP generation, you mentioned your performance versus the [indiscernible]. But could you also give some color as to how many of your portfolio schemes would have outperformed their respective benchmarks. And what would be the average data over their respective inputs?

[Feroze Azeez, executive]

Yes, I can tell you that, but that's something which I don't track as much, but I [indiscernible] track, but that's not a commitment I gave because everybody has a Tier 1, Tier 2 benchmark, if you want to know what is the outperformance on the respective benchmarks, which I think is itself to add it's 2.1% for this year.

[Prayesh Jain, analyst]

Okay. Great. And just in from a structural perspective, how do you see the share of your structured products, say, over the next 3, 5 years, how do you see that kind of changing?

[Feroze Azeez, executive]

I don't think there could be too much change. When we started in 2012, November, of structured product issuance at Anand Rathi. We had a 30% allocation at the maximum allocation today we went in 12 years to 40 came back to 30%. We had power at 35% for most of the portfolios, we recommend this. So to answer your question, it's going to be a plan B in the portfolio. And that, to my mind, would be 1/3 or close to that for the next 10 years. Unless the macroeconomics change, it which are the first order breaks of long-term options changed dramatically, which I think is unlikely Vera and Vita, which are the second owner Greeks, which we track to make a product, unless they change over itself, there is no reason why with the location would change on the same product, which we have done, 1,500th will take. We don't believe in innovation. We believe in optimal innovation because innovation for the head of it is something which is detrimental to the shop ratio of the portfolio. That's what our study shows.

[Operator]

The next question is from the line of Rohan Mandora from Equirus Securities. Sorry to interrupt you sir, may I request you to use your handset.

[Rohan Mandora, analyst]

Is better?

[Operator]

Yes, sir. Please go ahead. So we are not able to hear you very clearly.

[Rohan Mandora, analyst]

Sorry, I'll join back the queue.

[Feroze Azeez, executive]

We can hear you Rohan. Now. I could hear. So sir, I could hear you.

[Operator]

Sorry, he got disconnected. Due to no response from the current participant, we will take the next participant. The next question is from the line of Sunil Shah from SRE PMS.

[Unknown Analyst]

Yes. Thanks for the opportunity congratulations to the entire team of Anand Rathi. So I've been there in the company for like a reasonable period of time, and I'm really looking at being there for like another 5, 10 years, as you stated, an all are targeting 20% to 25% growth over the next decade. That's the sense and we are clearly preparing our company in that direction, really, really appreciate the client acquisition to employee retention to the products, processes, everything. So the only point is this one, and I don't want to sound negative, but are we working or preparing for or [indiscernible] as creating a proxy of fares in the organization because Syros has been there for a long period of time. And has all the firepower today also in a hearing peak. But my only that fix sigma event or the black swan is Firas kind of decides to move on or whatever, are we preparing any proxy? Just an outlier completely minus 3 sigma event. But are we working towards creating any such thing? This is just 1 thought but that's the only risk which I see in the company at this point of time. So I just wanted to bounce this let's create some thoughts I just want to hear your thoughts to [indiscernible].

[Feroze Azeez, executive]

Thank you, Sunil Shah, for your question. Thank you to BRE Investor for so long in your PMS right [indiscernible]. So Sunil Shah, [Foreign Language], but I think I'm not -- I'm just supposed to, to be honest, and I'm not being trying to sound modest. Rakesh, sir, who is a back bencher is the person who actually put the strategy in place. Segment was chosen by Rakesh, the strategy mathematical approach was chosen by Rajastan. And his experience is what I try and articulate today, like you rightly said, sir, I joined in September 2012. So finished about 12 years. Now I speak like Rakesh. But she doesn't speak so much in the public is why it is misconstrued that it's my language, point one. Now I will give you a little more tangible answers. This was just a disclaimer. And in 2015 July, I was chosen by Rakesh to be the Deputy CEO, not for the purpose of our transition because 1 of us can die, right, to be honest, right, in a event, right? Not 6 sigmas certainty that 1 of us will die sooner unless we take the same flight and something happens. And so our light and note had a very strong on chat. So Sunil, what I'm saying is [Foreign Language]. So we are 2 of us, point one, and not one, okay? I might be doing the talking in the public domain. I have at his brain is significantly more than mine in the business because of joining in 2007, 1st April 2007. That's point one. Point two, if you look at it [Foreign Language], okay, barring the last 4, 5 hires have been there for more than 12, 14 years. My Hyderabad unit is taken care by Pratima, she's 17 years. Our deli unit is taken care by Manish Ribas, who is 10 years. Azil came with us again [indiscernible]. So if you just went the second in line, the average period the unit heads have spent is anything more than 11, 12, 13, 14 years. We've hired 3 people from Karvy who came in 2015, '18, '19 and '16. So they would bring down the average because they spent some then coming to the product head who heads this division of 145 people, which is the brain in there, not to be back to drop and technology, Chetan, the product head has worked as a colleague of mine, from the first guy I started in the corporate world in 2004, on February 10, 2004, when I joined [indiscernible], that was 1 of the first people I met. So we have worked together as a group for really long periods of time, like Chetan, 20 years by product deputy had close to 14 years. So if you look at all the product top 10 people. I actually have 6 people plus 14 people, 6 people have worked -- have a colleague to me for at least 14, 15 years from 2010, 14 years. And the next in line and the product, 14 people have spent at least 8 years average. So the only way to prepare for somebody's absence in fortunate event is to have near 0 attrition, both at product level and RM level. That's what we've tried to do, but you really set us thinking. So any, we will try and see if there can be a more cogent plan, and I will take this as a feedback.

[Unknown Analyst]

Really appreciate the detailed explanation that you shared with me and good to know the tire to the people working. So thanks for all this. That emits to rest all the doubts that I had in my mind. Thank you so much, loan you a real long journey ahead in all.

[Operator]

The next question is from the line of Viraj Mehta who is an individual investor.

[Unknown Attendee]

Am I audible?

[Operator]

Yes, sir, you are audible.

[Unknown Attendee]

Great set of numbers. Quality an up-up growth for the last 2 years, reaching almost 4,000 number great achievement roles I have only 1 question, which is any plan of corporate action going forward? [indiscernible].

[Feroze Azeez, executive]

Like we said the last time also, the AGM, I quote my Chairman saying that we will surely consider corporate actually, is what was said. And that stands to today as well in the same manner, which was told in the past. But 1 very interesting data, we made a predictive model to see which are the companies which give a bonus. Maybe if you are getting this with message, you can share with you predictive analytics of which are the companies which end up giving bonuses on NSE 500, we've done some interesting data and any company which has risen has a larger probability of giving bonuses in any company which has given larger bonuses have risen so vice versa, which is at, I think we can give you. So I'm giving you an abstract answer, but we have done some predictive analytics in terms of the NSE 500 companies in terms of bonus. Not specifically on rate, but whatever I heard Mr. Raki hearing him in the AGM, I'm repeating the same thing, yes, we will consider, we believe in rewarding the shareholder.

[Unknown Attendee]

[indiscernible]

[Operator]

The next follow-up question is from the line of Sanath from Unicon assets.

[Unknown Analyst]

Just to follow up that the number of clients in the H1 FY '25 or say, on 1 year if we compare from H2 are doing for H1 FY intact. What kind of client base that is like in terms of the [indiscernible] which category do you place and what percentages would you sand INR 5 lakh to INR 5 crores and 5 to 50 or more than?

[Feroze Azeez, executive]

Sorry, your name, I missed again, sorry.

[Unknown Analyst]

[indiscernible]

[Feroze Azeez, executive]

[indiscernible], sorry. [indiscernible], see, how we look at it is the first filter is we try and see whether the client is from our segment. What is our segment is INR 50 crores to INR 50 crores of investable surplus other than the office is in home occupied. That's the first step we do. Let's assume Finatis balance sheet, apart from the home, he lives in is picking across. Then I know the first stigma, but he has the potential to be my client segment. Then I'll tell [Foreign Language] but I think they've come some distance unlike most private banks who say that you start with INR 5 crores, which we think is a little unfair because. So that -- so most of the clients, most, if not all, would be most, if not all, will be invectable surplus is greater than INR crore, crores. and below INR 50 crores. We don't like to go after rich people who have got into money just now, unlike most of our friends in the industry do they see the as sold the business for INR 200 crores. They would go to it. We would not want to go to him because I don't want to fight a cost was. And we like to get intergenerational wells and INR 50 crores to INR 50 crores in that segment, starting with one. Does it answer, sir?

[Unknown Analyst]

Yes, that definitely answers. And what do you hear from those into -- like what are their expirations in terms of [indiscernible]. What are they looking for, really? Like 5 to 50 is the, I think, the best segment in the entire recognizing industry. That's my view.

[Feroze Azeez, executive]

Absolutely. That's a good segment provided I am building a business on the basis of MAT. So if you ask me, what do these clients have? They don't have clarity. Okay? That's why is taglined as uncomplicated. What is happening to INR 15 crore client, if I described. He is distributing a INR 7 crores in real estate. He's got INR 7 crore, INR 8 crores in financial assets distributed across 3 different financial advisers. One is surely going to be his bank. He is acting like a INR 2 crore client to be. And that is resulting in people selling him products, which may not suit this need. So what is their first requirement. They don't want it, but the need is clarity of objective. They don't want it. They want something fancy to start with. When we make somebody asked about Nakia is the first question. [Foreign Language] and your beta is measured. Today, most of the advisers -- most of the clients at between INR 20 crore balance sheet will not even know the beat of their portfolio, right? So what do they want? They want new products, what do they need? They need clarity of objective. They need clarity of mathematics. They need services which are peripheral. We have done about 6,000, 7,000 wells, and most of the wells which we audit are incorrect, even if they are a INR 500 crore bill. So we have done 7,000 wells. We've listed down 11 to 11 most popular mistakes. They need it, but they don't want it. So we have to create the need before we address it. So only appealing to a person whose life is complicated and you open his eyes saying that is any complexity. As seen portfolios, you'll be surprised, 100 higher fines, 100 sims with a sharp ratio of 0.1. I've seen 92 since with sharp ratio of minus right? So that's -- so what do they need? They need some mathematics. And since this segment is filled with professionals, professionals respect mathematics because they have to present to the board [indiscernible] so they work with mathematics a little more than a promoter of because promoter is lesser answerable than a professional. I as a professional and more answerable than my promote. So that's why that segment is good, and we believe in mathematics. That's why our RMs being introverts, do a good job because the state come to the point to the mathematics and does not ask him what you wait last night or how was your [indiscernible].

[Unknown Analyst]

Great, great. And do we do any insurance kind of role?

[Feroze Azeez, executive]

Yes, sir.

[Unknown Analyst]

Do we sell any insurance kind of product?

[Feroze Azeez, executive]

No, no, no.

[Unknown Analyst]

Great. Great.

[Feroze Azeez, executive]

And investment based insurance. Would we have sold some term plans with general insurance to protective house? Answer is yes. Anything which is investment and insurance mix trying to [indiscernible].

[Operator]

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. Feroze Azeez for closing comments.

[Feroze Azeez, executive]

I like to have -- I'd like to thank everyone for being a part of this call. We hope we have tried our best to answer the questions to our ability. If you need any more information, please feel free to contact Mr. Vishal Sangli our Investor Relations Head, and Rajesh Bhutara, who is our CFO for decades. I would like to extend my good visions for the upcoming investor season and may you have a great decent in and thank you for your time and patience.

[Operator]

On behalf of Anand Rathi Wealth Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.