Anand Rathi Wealth (NSE: ANANDRATHI) reported Q2 FY27 after the close on Friday, 9 October 2026. The print is a mixed bag: the franchise (inflows, AUM, guidance) held up, but reported profit and margins did not. The next cash session is Monday, 12 October.
- Executive Summary: The Headline
- Mixed bag, not a clean beat. Adjusted “business” profit rose, reported profit fell, and operating margins compressed sharply.
- Overarching narrative: record client inflows and an 18% AUM rise offset a weak equity tape, but wage and operating-cost inflation, plus the absence of last quarter’s mark-to-market gain, broke the profit-growth streak on a reported basis.
- Management kept FY27 guidance and the 20–25% long-term growth line, and declared a ₹4 interim dividend. That is the cushion against the headline miss.
- Actuals vs. Market Estimates (The Core Analysis)
Two profit numbers are in the market. Use both. The exchange print is what algos and screens will flash; the company wants the street to use the adjusted figure.
| Metric | Q2 FY27 | YoY | QoQ | vs pre-result street range |
|---|---|---|---|---|
| Revenue from operations (reported) | ₹344 cr | +15.7% (₹297.4 cr) | about flat vs Q2 base; Livemint cites ₹343.98 cr | Slight miss. StockWatch range was ₹360–380 cr. About 4–9% below that band, roughly 7% below the ₹370 cr midpoint |
| Company “business” revenue | ₹357 cr | +16% | — | In line to a small miss vs the same ₹360–380 cr band (about 3.5% below midpoint) |
| EBITDA | ₹116.8 cr | −14.8% to −15.1% (₹137.1 cr) | — | Clear miss. No clean published EBITDA consensus, but the direction is the opposite of the growth the street was underwriting |
| EBITDA margin | 34% | −1,220 bps (46.2%) | — | Well below the 33–35% PAT-margin watch level implied by the preview, and a seven-quarter-style cost problem carried forward |
| Reported PAT | ₹89.0–89.95 cr | −9.5% to −10.4% (₹99.3 cr) | −46% (₹163 cr in Q1) | Large optical miss versus anyone anchoring to Q1 or to a ₹130 cr-plus run-rate |
| Business PAT (ex fair-value, ESOP, related tax) | ₹122 cr | +22% | — | Miss vs the ₹130–145 cr preview band. About 6% below the low end and about 11% below the ₹137.5 cr midpoint |
One-offs that distort the print:
- Q1 other income was ₹108–110 cr, of which about ₹96 cr was a mark-to-market gain on the holding in Anand Rathi Global Finance. Q2 other income fell about 90% to ₹11 cr. That alone explains most of the 46% sequential drop in reported PAT. It is not an operating collapse.
- Reported PAT also embeds ESOP expense. The company’s own bridge is the right operating read: H1 business PAT ₹238 cr, +23% YoY, equal to 52% of the ₹460 cr full-year guide. H1 revenue ₹693 cr, +17%, equal to 49% of the ₹1,415 cr guide.
- AUM ₹1,08,377 cr, +18% YoY, a shade under the ~20% preview, but achieved while Nifty was down about 8% over the same window. Net inflows were a record ₹4,186 cr, +39% YoY. Equity MF net inflows were a record ₹2,867 cr, +39%. MF distribution revenue ₹145 cr, +18%.
- Brokerage Stance & Target Revisions
Collective pre-result stance is cautious, not bullish. Coverage is thin (two to three houses). StockAnalysis shows a Sell consensus and a stale average target of ₹1,580 (about 22% below Friday’s close). Motilal Oswal’s April 2026 note was Neutral with a ₹3,100 target on the pre-bonus price (CMP then ₹3,591, 45x FY28E EPS). After the 1:1 bonus that target equates to roughly ₹1,550. A later narrative trim moved a target from ₹1,700 to ₹1,630. A 2 October preview cited a Hold consensus and an average target near ₹2,629. Treat ₹2,629 as the optimistic outlier. The live cluster is Neutral/Hold to Sell, with targets clustered around ₹1,550–1,630, below the ₹2,038.70 close.
Primary thesis: AUM, revenue and PAT can still compound near 20% with RoE above 35% and only a 2–4 bp TER hit. The concern that will drive any downgrade is whether the employee-cost spike (called out at +67% YoY in Q4 FY26) is now structural. A 1,200 bps EBITDA-margin drop in Q2 gives that camp the number it was waiting for. Valuation at about 74–76x trailing earnings leaves no room for a margin miss.
- Management Guidance & Commentary Analysis
Tone is confident, not cautious, on the franchise, and explicit about the macro.
Rakesh Rawal (CEO) and Feroze Azeez (Joint CEO) called the quarter “consistent and market-agnostic” despite the US–Israel–Iran conflict, higher US yields, a strong dollar, higher crude and FPI outflows. They said domestic clients kept adding, and a meaningful share of the ₹4,186 cr inflow came from existing families deepening the relationship. Active client families rose 12% to 14,309. Relationship managers rose by 45 to 431.
Guidance versus the street: FY27 revenue ₹1,415 cr and PAT ₹460 cr are unchanged. H1 is tracking (49% of revenue, 52% of PAT). Long-term growth of 20–25% is reiterated. Digital-wealth AUM is ₹2,531 cr (+14%), the Omni platform has 6,898 subscribers, London has started, and GIFT City approvals are in hand. That is in line with what Motilal underwrote in April. It does not address the margin question. The street wanted cost discipline. It got AUM discipline.
Dividend: ₹4 per share (80% of ₹5 face value). Record date 15 October 2026. Last cum-dividend cash session is Wednesday, 14 October. Yield is about 0.2%. It will not support the stock.
- Probable Market Reaction & Trading Setup
Immediate sentiment: gap-down open on Monday, with a test of ₹2,000, then two-way trade rather than a one-way slide. Base case is a 2–4% gap down toward ₹1,960–2,000, a probe of the ₹2,000 put wall, and a reclaim attempt toward ₹2,080–2,100 if the adjusted-PAT and inflow narrative gets airtime after 9:30 am. A sustained break below ₹2,000 opens ₹1,925 (options expected-range floor). Upside supply sits at ₹2,100 (max pain) and ₹2,200 (heaviest call open interest).
The why: Friday’s session already priced some anxiety. The stock closed ₹2,038.70, down 4.68%, on about 10.9 lakh shares, with a short build-up in the 27 October futures (open interest 28.81 lakh, +8.8%, price down). PCR is 0.89. Change-in-OI PCR is 0.59. Results were not in that close. The tape on Monday will react to “PAT −10% YoY, −46% QoQ, EBITDA margin 34% vs 46%.” That headline beats “business PAT +22%” in the first hour. What limits follow-through selling is that the sequential drop is mostly the Q1 mark-to-market rolling off, H1 is still ahead of the PAT guide, and inflows just printed a record. Rich valuation means dips get bought by franchise bulls and rallies get sold by multiple bears. Hence range, not trend, unless ₹2,000 breaks on volume.
Key catalyst for traders: the ₹4,186 cr record net inflow (+39%) together with the reaffirmed ₹460 cr PAT guide (52% already done). That pair is what can force short covering above ₹2,100. The number that brings fresh institutional selling is the 1,200 bps margin compression, if Monday’s call treats employee cost as structural rather than hiring for the RM addition of 45.
This is a reaction framework, not a recommendation.