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Anand Rathi
IIFL Wealth
Target: ₹1,193
CMP: ₹914.25
Of the big guns in the wealth business, IIFL Wealth is moving ahead with its stable annual recurring revenue (ARR) model, harnessing the vast growth potential in an under-penetrated wealth industry. Its business growth comes organically and through acquisitions. Its hallmark is low attrition rates (clients and RMs) even in a volatile environment.
Higher dividend payouts render it attractive to shareholders.
The ARR is the major growth driver, which is independent of transactions and would provide stable income streams. The share of ARR in AUM rose from 33 per cent in FY16 to 40 per cent in FY20 and is expected to go up to 55 per cent by FY23. Within ARR, IIFL One is the focus; we expect it to clock a 49 per cent CAGR over FY20-23 to ₹59,000 crore (FY20: ₹17,700 crore), constituting 38 per cent of ARR AUM.
AIF-induced AMC AUM grew from ₹ 5,400 crore in FY16 to ₹22,000 crore in FY20 and is expected to clock a 37 per cent CAGR over FY20-23 to ₹55,900 crore.Product launches and senior hires over the last two years are expected to drive growth.
Fresh money from existing clients and a few acquisitions in the last few years have augmented growth.
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