Anand Rathi Share and Stock Brokers IPO: Should you apply?

Summary: Anand Rathi Share and Stock Brokers is a full-service brokerage firm that offers services across various securities to a widespread clientele. Though it boasts decent numbers and long-standing client relationships, risks such as negative cash flows remain. We look at if its IPO is worth subscribing to.

The Anand Rathi Share and Stock Brokers IPO (initial public offering) will open for subscription on September 23, 2025, and close on September 25, 2025. The brokerage house is raising a fresh issue entirely, with the total issue size worth Rs 745 crore.

Let’s break down the company’s business, financials, strengths, risks and valuation to help you make an informed investing decision.

What the company does

Anand Rathi Share and Stock Brokers is a full-service brokerage house with over three decades of experience in India’s capital markets. It serves a wide spectrum of clients, from retail to ultra-HNIs and institutions, through offerings spanning equities, derivatives, commodities and currencies. 

The company has a strong presence across age demographics and its reach extends across 54 cities through 90 branches, over 1,100 authorised persons and robust online platforms. Backed by the Anand Rathi group, it combines an established track record with a multi-channel presence to drive growth from Tier 1 to Tier 3 cities.

Track record and valuation

When it comes to financials, Anand Rathi appears to be on a steady footing. This is primarily due to the growing inflows in equity and mutual fund investments across the country, as well as Anand Rathi’s long-standing customer base.

Between FY23 and FY25, its revenue and profit after tax (PAT) grew annually by nearly 35 per cent and 66 per cent, respectively.

Its margins, too, didn’t fail to impress, as the company’s EBIT margin surged by almost 13 percentage points during the two-year period. 

At the upper end of the price band (Rs 414), the stock is expected to be valued at 25.1 times its FY25 earnings and 2.1 times the book value. In comparison, Anand Rathi’s peers trade at a median P/E of 17.4 times and an average P/B of 3.4 times.

The good

Below are some of the key strengths of Anand Rathi Share and Stock Brokers.

#1 Highest revenue per client among peers

According to CARE, Anand Rathi Share and Stock Brokers reported the highest average revenue per client (ARPC) among its competitors in FY25 at Rs 29,347, following Rs 30,922 in FY24 and Rs 26,012 in FY23. This strength stems from its long-standing client relationships, a mature customer base and personalised services. Notably, nearly 59 per cent of the clients have been with the brokerage house for over three years, while 45 per cent have been with the firm for over five years (as of March 31, 2025).

#2 Diversified revenue streams

Anand Rathi’s revenues not only come from broking and allied services but also from non-broking activities, such as margin funding and product distribution. 

In recent years, growth has been led by the non-broking segment, with revenue rising from Rs 1,050 crore in FY23 to Rs 1,926 crore in FY25, a 35 per cent CAGR. By contrast, revenue growth from broking services grew slower at 27 per cent over the same period. With mutual fund penetration deepening, the firm is well-placed to benefit from rising demand for distribution and advice.

#3 Strong track record

Between FY23 and FY25, Anand Rathi’s profit after tax rose sharply from Rs 38 crore to Rs 104 crore, clocking a strong annual growth of nearly 66 per cent, while the EBITDA margin also grew steadily from 24.6 per cent to 36.8 per cent during the same period.

The bad

Despite its steady financials and client stickiness, Anand Rathi has certain weaknesses.

#1 Heavy reliance towards broking income for revenue generation

Broking and related services remain Anand Rathi’s largest business vertical, contributing around 60 per cent of the total revenue in FY25. Alongside this, the firm also operates a margin trading facility that enables clients to fund equity delivery trades by leveraging their collateral. Thus, a sharp fall in equity market participation, difficulty in attracting or retaining high-yield clients or even lapses in service delivery could materially impact both the broking and margin funding businesses.

#2 High working capital requirements for everyday operations

Anand Rathi’s business is working capital-intensive, with funds tied up in margin trading, receivables, and bank balances. These requirements are critical for running daily operations and sustaining revenues. While the company expects internal accruals, borrowings and IPO proceeds to meet these needs, any shortfall in raising or generating sufficient working capital could affect its business, financial condition and performance.

Where will the IPO proceeds go?

Of the total issue size of Rs 745 crore, the company plans to utilise Rs 550 crore towards funding its working capital needs, while the remaining funds will be used for general corporate purposes.

So, should you apply for the Anand Rathi Share and Stock Brokers IPO?

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Also read: Seshaasai Technologies IPO: Apply or avoid?