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Operating profit miss; PAT in line due to other income

* 360 One WAM (360ONE) posted an operating revenue of INR8.2b (in line) in 1QFY27, reflecting 24% YoY growth. The growth was led by a 20% YoY growth in recurring revenue and a 37% YoY rise in transactional revenue.

* ARR net inflows of INR108.1b were driven by robust flows in the wealth management segment (INR133.8b), while the AMC business saw outflows of INR25.6b owing to the redemption of a large institutional mandate. ? The cost-to-income ratio at 54.3% increased 120bp YoY (MOFSLe – 53.1%), with operating profits at INR3.8b (5% miss), growing 21% YoY.

* Other income of INR470m led to an in-line PAT of INR3.3b (+13% YoY).

* The long-term objective of the management is to expand the RM franchise to 350–400 RMs, servicing 9,000–10,000 client families over the next three years, which implies adding 30-40 RMs every year. The ECM business, which is currently being ramped up, is expected to contribute ~15% of TBR over the next 2–3 years. ? We broadly retain our estimates for FY27/28, considering continued flow momentum and the benefit of operational efficiency as RM productivity improves. We adopt an SoTP approach, valuing ARR at 36x FY28E PAT and TBR/other income at 20x FY28E PAT, to arrive at a fair value of INR1,300. Reiterate BUY.

Robust ARR inflows; yields decline

* 360ONE reported net ARR inflows of INR108b in 1QFY27 vs, INR210b in 1QFY26. On the wealth management side, ARR net flows stood at INR134b (INR200b in 1QFY26). AMC saw outflows of INR25.6b vs. inflows of INR9.7b in 1QFY26 owing to the redemption of a large institutional mandate.

* Wealth management ARR’s AUM grew 24% YoY to ~INR2.4t, driven by 39%/12%/68% YoY growth in 360 One Plus/Distribution/Lending AUM. Robust inflows of INR92.8b were observed in 360 ONE Plus.

* Wealth management ARR’s retention stood at 71bp (vs. 78bp in 1QFY26), with the YoY dip largely led by a decline in lending book retention to ~5.07% (from ~6.25% in 1QFY26). Distribution and 360 ONE Plus retention also saw a YoY dip of 4-5bp. ? Asset management AUM grew 8% YoY to ~INR1t, driven by 25%/10% YoY growth in AIF/MF AUM while discretionary PMS declined 14% YoY.

* Asset management yields stood at 83bp (79bp in 1QFY26), with DPMS and MF retention rising and AIF retention declining YoY. Strategic recalibration is ongoing to improve the performance in DPMS. ? Employee costs grew 29% YoY to INR3.3b (in line), and the company aims to add 30-40 RMs annually for the next 2-3 years. Other admin costs grew 23% YoY to INR1.2b (in line), resulting in total costs of INR4.5b.

* Other income stood at INR474m in 1QFY27 (vs. INR630m in 1QFY26).

Valuation and view

* 360ONE offers a compelling structural growth story anchored to India's expanding wealth and asset management market. The company continues to garner robust flows, especially in the wealth management business, supported by the onboarding of new teams. Asset management is seeing stable flow momentum with some lumpiness due to institutional mandates. The acquisition of B&K and the UBS collaboration enhance the company’s international footprint, broaden client access, and strengthen its transactional platform. Operating leverage and cost synergies from integrations are anticipated to improve the company’s profitability as new businesses scale up.

* We have largely maintained our estimates for FY27E/28E, considering continued flow momentum and the benefit of operational efficiency as RM productivity improves. We adopt an SoTP approach, valuing ARR at 36x FY28E PAT and TBR/other income at 20x FY28E PAT, to arrive at a fair value of INR1,300. Reiterate BUY.

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