Anand Rathi Q3 Profit Soars 72%, Eyes Balanced Revenue by 2027

Introduction

Anand Rathi Share & Stock Brokers Ltd. (ARSSBL) has reported a robust financial performance for the third quarter of fiscal year 2026, ending December 31, 2025. The company announced a significant 71.8% year-on-year increase in its Profit After Tax (PAT), underscoring its operational efficiency and successful growth strategy amidst challenging market conditions. This strong bottom-line growth is supported by a healthy rise in revenue and expansion across key business verticals, including assets under management and its margin trading facility.

Under the guidance of Chairman and Managing Director Pradeep Gupta, the firm is also advancing its strategic goal to rebalance its revenue streams. The objective is to create a more resilient business model by reducing dependency on volatile broking income and increasing contributions from more stable, non-broking segments.

Stellar Q3 Financial Performance

For the October-December 2025 quarter, ARSSBL's revenue from operations stood at ₹248.2 crore, a notable 21.5% increase compared to the same period in the previous year. The company's profitability saw an even more impressive surge, with PAT reaching ₹37 crore, up 71.8% YoY. On a sequential basis, the net profit grew by 33% from the preceding quarter.

The firm maintained a strong Earnings Before Interest, Tax, Depreciation, and Amortisation (EBITDA) margin of 40.8%, reflecting its ability to manage costs effectively while scaling its operations. This performance highlights the company's capacity to generate substantial profits from its revenue growth.

Key Operational Metrics Drive Growth

The financial results were bolstered by strong momentum in the company's operational metrics. Assets under Management (AUM) expanded by 32.1% year-on-year, reaching ₹8,368.8 crore. The Margin Trading Facility (MTF) book, a key indicator of investor engagement, grew by an impressive 46.1% YoY to ₹1,231.7 crore.

Furthermore, the company's Assets Under Custody (AUC) saw a significant 48% YoY jump, reaching ₹1.06 trillion. This substantial increase is attributed by management to sustained client trust and a disciplined approach to financial stewardship. The active client base also continued its steady expansion, growing by 6% sequentially to over 158,000 clients.

The Strategic Shift: A 50:50 Revenue Mix

A central element of Anand Rathi's long-term strategy is the de-risking of its business model. Pradeep Gupta confirmed that the company is actively working to rebalance its revenue mix. Currently, the ratio stands at approximately 55% from broking and 45% from non-broking activities. The firm is aspiring to achieve an equal 50:50 split between these segments by March 2027.

This strategic pivot aims to build more predictable and sustainable earnings streams by increasing the contribution from businesses like distribution and the margin trading facility. This move is designed to insulate the company from the inherent volatility of capital markets and provide a more stable foundation for long-term growth.

Management's Growth Outlook

The management has set ambitious targets for the coming years. The company aims to expand its AUM to between ₹9,500 crore and ₹10,000 crore by March 2026. The MTF book is targeted to reach ₹1,500 crore within the same timeframe.

Looking ahead to profitability, Gupta expressed confidence in maintaining a strong growth trajectory. For the fiscal year ending March 2027, the company expects a minimum PAT of ₹180 crore to ₹190 crore. The management's aspiration is to consistently achieve a 20-25% growth in topline revenue and a 30-35% growth in bottom-line profit annually.

Navigating Market Headwinds

Pradeep Gupta acknowledged that FY26 presented a challenging environment for Indian capital markets, characterized by 'lacklustre gains' from benchmark indices and sustained selling pressure from foreign investors. He noted that concerns over valuations and currency volatility subdued market performance.

Despite this difficult backdrop, Gupta stated, "our business continued to grow. We delivered strong broking revenues... an affirmation of our clients' trust and our disciplined approach to financial stewardship." This performance in a tough market demonstrates the resilience of the company's business model and its strong client relationships.

Focus on Client Relationships

In an industry increasingly dominated by discount and algorithm-based broking, Anand Rathi continues to emphasize its relationship-based approach. Management believes this focus is a key differentiator. The strategy's success is reflected in client loyalty, with over 54% of its clients having been with the firm for more than three years. This enduring relationship is a testament to the consistency of service and the relevance of its offerings.

Conclusion

Anand Rathi's third-quarter results showcase a company that is not only delivering impressive financial growth but is also executing a clear and prudent long-term strategy. The significant jump in profitability, coupled with the expansion of key operational metrics, positions the firm strongly. The deliberate move towards a balanced revenue mix is set to enhance earnings stability and de-risk the business model, building a foundation for sustainable growth in the dynamic Indian financial services landscape.