Buy 360ONE WAM Ltd for the Target Rs.1,450 by Motilal Oswal Financial Services Ltd
RM exit hurts flows; synergy integration remains key
* 360ONE WAM (360ONE) reported an operating revenue of INR6.6b (in line), reflecting 10% YoY growth in 1QFY26. This was driven by a 36% YoY growth in ARR income to INR5.1b (7% beat), offset by a 32% YoY decline in TBR income to INR1.5b (8% miss).
* ARR AUM rose 30% YoY to INR2.9t (10% beat), while TBR AUM grew 36% YoY to INR2.1t (10% beat), taking the total AUM to INR5t (+33% YoY).
* The cost-to-income ratio at 52.9% improved 880bp YoY (160bp higher than MOFSLe). The 50% beat in other income resulted in a 7% beat in PAT at INR2.9b (+18% YoY) for the quarter.
* For FY26, total gross flows are likely to be INR600-650b, including INR100b from UBS, INR150-200b from B&K, and the remaining INR300- 350b from organic initiatives.
* We adopt an SoTP approach to build in the optionality of UBS collaboration. Additionally, we have integrated B&K’s performance with the core performance of 360ONE, resulting in a 7%/12% rise in our PAT estimates for FY26/FY27. Earnings from funds raised via UBS warrants forecasted for FY29 have been discounted to FY27 at 13%. We reiterate our BUY rating on the stock with a one-year TP of INR1,450.
Yields remain steady; other income drives PAT beat
* 360ONE’s ARR AUM at INR2.9t witnessed strong 30% YoY growth, driven by net ARR inflows of INR209b in 1QFY26. On the wealth management side, ARR net flows of INR199b were mainly contributed by the integration of B&K flows towards the distribution segment. AMC net flows grew 12% YoY to INR10b, largely contributed by AIF and MF products.
* Wealth Management ARR AUM grew 38% YoY to INR1.9t, driven by 40%/38%/19% YoY growth in 360 One Plus/Distribution/Lending AUM.
* Wealth management ARR retention stood at 78bp (71bp in 1QFY25), driven by an improvement in distribution and lending book yields. Going forward, lending book yields are expected to stabilize at 4.8-5% (5.5%+ since the last three quarters).
* Asset management AUM grew 16% YoY to INR925b, driven by 13%/23%/13% YoY growth in AIF/discretionary PMS/MF AUM.
* Asset management yields were at 79bp (74bp in 1QFY25), driven by carry income (INR306m in 1QFY26) and an improvement in AIF yields. Sequentially, yields were mainly affected by the lumpy carry income in 4QFY25 in an institutional mandate.
* The broadly stable yields and strong AUM growth resulted in a 36% YoY growth in ARR income to ~INR5.1b. TBR income declined 32% YoY to INR1.5b, affected by the high base.
* Employee costs grew 32% YoY to INR2.6b (9% higher than the estimate), and other admin costs grew 35% YoY to INR964m (in line), resulting in total costs of INR3.5b (7% higher than our estimate).
* Other income came in at INR630m in 1QFY26 (vs. INR969m in 1QFY25).
Highlights from the management commentary
* 360ONE’s 1QFY26 was a solid quarter in terms of gross flows, which were at INR60-65b (excluding B&K flows). However, the exit of two RM teams led to gross outflows of INR35-40b, representing 4–6% of AUM, taking net inflow to INR15-20b during the quarter.
* The impact of the team exits is largely front-ended, and while flows may be impacted in 2QFY26 as well, the company expects recovery over the rest of the year. Onboarding of new RM teams is expected to largely offset the attrition-led impact on AUM.
* Headline wealth management yields are expected to remain stable, although the blended yield may reduce by 2-3bp due to changes in business mix towards the lower-yielding advisory segment. On the asset management side, yields from listed strategies are expected to decline slightly (2–3 bps) as more AUM is added in this category.
Valuation and view
* 360ONE offers a compelling structural growth story anchored in India's expanding wealth and asset management market. The company continues to drive strong gross flows across both wealth and asset management, with a temporary blip due to RM attrition, which is likely to be offset by the onboarding of new teams. The recent 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 expected to improve profitability as new businesses scale.
* We adopt an SoTP approach to build in the optionality of UBS collaboration. Additionally, we have integrated B&K’s performance with the core performance of 360 ONE, resulting in a 7%/12% rise in PAT estimates for FY27/FY27. Earnings from funds raised via UBS warrants forecasted for FY29 have been discounted to FY27 at 13%. With multiple projects underway—including mid-segment HNI business expansion, ET Money integration, B&K integration, and UBS collaboration— execution will be crucial. We reiterate our BUY rating on the stock with a one-year TP of INR1,450.
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