Buy 360 ONE WAM Ltd For Target Rs. 1,180 By JM Financial Services Ltd
360 ONE WAM reported a steady operating performance – operating PBT rose (16.5% YoY, 11% QoQ) to INR 3.2bn. PAT was up (+4% YoY, -9% QoQ) to INR 2.5bn, missing JMFe by 7.9%. The miss was led by weak Other Income of INR 70mn. Cost to core revenues improved by (113bps YoY, 150bps QoQ) to 51.2% as expenses growth was controlled to (+11% YoY, +5% QoQ). In this quarter, topline benefited from carry income to the tune of INR 500mn in asset management. Further, the company consolidated the AUM of ET Money of INR 331bn, of which INR 17.5bn was ARR AUM while the remaining was TBR AUM. This helped to grow the AUM by (24.5% YoY, flat QoQ) to INR 5,815bn. The company expects to complete the B&K Securities acquisition within this quarter, and is excited on building its foreign presence (focussed on global Indians) with the consummation of the UBS deal. As we consider the acquired entities, we expect core revenues to grow 24%/23% in FY26e/FY27e, while PAT grows 33%/25%. We believe in the medium-term potential of the two deals for 360 ONE WAM. As we incorporate the dilution resulting from UBS transaction, we see our FY27e EPS cut by 0.7%. However, we believe it will further strengthen the platform in the medium term. We value the entity at an SOTP based Target Price of INR 1,180 (up from INR 1,050), valuing the company at a blended 30x FY27e EPS of INR 39. Maintain BUY.
* In line operating results helped by carry income: AUM grew by (24.5% YoY, flat QoQ) to INR 5,815bn, helped by consolidation of INR 331bn from ET Money, of which only INR 17.5bn is ARR AUM, the remaining is Transaction & Broking oriented. Revenue from operations grew (14% YoY, 8% QoQ) to INR 6.5bn. While INR 500mn in carry in asset management business helped the topline growth, ARR income, ex-carry, grew a healthy (34% YoY, 6% QoQ). Transaction and broking income was subdued, contracting (31% YoY, 16% QoQ) to INR 1.5bn.
* UBS collaboration strengthens the franchise, EPS dilutive in near term: While UBS would help 360 ONE WAM expand product offerings and build an international presence, we do not see immediate EPS accretion, unlike the B&K acquisition, as B&K earned INR 1bn in PAT in FY25. 360 ONE has incurred significant expenses of INR 500 in its international foray and INR 400 in its HNI foray, which should normalise hereon, improving cost ratios as the businesses mature. As we incorporate the dilution resulting from UBS transaction, we see our FY27e EPS cut by 0.7%. However, we believe it will further strengthen the platform in the medium term.
* Valuation and view: 360 ONE has established a robust franchise, which has earned it a premium brand value. We assign a PE multiple of 32x and 33x to the wealth and asset management segments, respectively. Also, we assign a 17x multiple to broking and other income, which incorporates the projected revenues from the B&K acquisition. We value the entity at an SOTP based Target Price of INR 1,180 (up from INR 1,050), valuing the company at a blended 30x FY27e EPS of INR 39. Maintain BUY.
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SEBI Registration Number is INM000010361
